SEBI proposes Common Advertisement Code: Creators with more than 5 lakh followers on a single platform would be treated as “celebrities” for SEBI-regulated entities’ advertisements
We all have come across videos or shorts made by creators giving financial advice or opinions to the viewers for investment and saving purposes. Well, the creators may face stricter SEBI scrutiny if they are advertising about SEBI-regulated entities, as per the new draft proposal released by the Securities and Exchange Board of India (SEBI).
Just a few days back, SEBI proposed the Common Advertisement Code, as per which creators with more than 5 lakh followers on a single platform will be classified as “celebrities” when endorsing SEBI-regulated entities.
As per the consultation paper on the Common Advertisement Code, a person counts as a celebrity if they fall into one of these categories:
- Featured in the top 50 of any celebrity index published by a national publication where the index is current or at most a year old.
- Played a lead role in any mainstream film, TV serial, TV show, or OTT web series
- An influencer with more than 5 lakh followers or subscribers on any single social media platform such as YouTube, Instagram, Facebook or X
- A sportsperson who has represented the national team or competed internationally in sports events
- Hosted or anchored a TV programme for at least one season or 10 episodes
- Won or finished up as a runner-up in a popular TV or OTT show, or advanced through its qualifying rounds
- A virtual character
- Anyone the Board or supervisory body considers capable of influencing viewers of an ad.
With this ‘celebrity” tag comes stricter rules and more scrutiny for the creators:
- Creators can promote a brand but cannot make recommendations or promotional pitches for specific financial products.
- Celebrity-tagged ads still require SEBI’s prior clearance before going live. The regulated entities are also required to upload the advertisement to a centralised portal within 24 hours of publication
The code also bans dark patterns that trick users into choices they do not intend, like false urgency, forced action or subscription traps. Advertisements would be barred from carrying guaranteed-return claims, deceptive comparisons, testimonials and incentives linked to account opening/reactivation or increased trading activity.
The proposal further states that an entity can advertise a rating or ranking only if a recognised Past Risk and Return Verification Agency (PaRRVA) issues it. An ad citing a specific security or scheme as an example must place the disclaimer on the same page or in the same video frame. An entity must act within 7 days against any third party that advertises without consent and disclose the incident on its website.
SEBI has invited public comments on this draft framework till 14th July.
