Finfluencers

Subject : Economy

Section: Capital market

Concept :

Recently, a front page advertisement in a business daily featuring a financial influencer (or finfluencer) and a logo of the IT Ministry next to that has drawn sharp criticism from people on the Internet.

About finfluencers

Finfluencers are people with public social media platforms offering advice and sharing personal experiences about money and investment in stocks.
They give the ordinary investor information and advice on an array of financial topics such as stock market trading, personal finance and mutual funds.
Their videos cover budgeting, investing, property buying, cryptocurrency advice and financial trend tracking.

Concerns:

They provide unsolicited ‘stock’ tips on various social media platforms without being registered investment advisers.
It is unclear if these influencers have any educational or professional qualifications to offer such financial advice.
It is also not clear that if there is any kind of monetary transaction that happens between them and the entity they are promoting.
Scamsters are using this route to manipulate share prices.

Are there any guidelines?

The Advertising Standards Council of India (ASCI) released new guidelines for social media influencers and other advertisers about publishing ads about virtual digital assets (VDA).
Per the guidelines, all advertisements for VDA products, VDA exchanges or featuring VDAs should carry a disclaimer.
The disclaimer should say, “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions”.
ASCI also released its half-yearly report of complaints detailing social media influencers that were found to be non-compliant with its advertising guidelines.
SEBI has taken note of it and is working on guidelines for content creators in the sector.
Recently, Finance Minister Nirmala Sitharaman asked people to exercise caution while following the advice of finfluencers.