The Securities and Exchange Board of India (SEBI) has notified a common advertisement code for market intermediaries, allowing them to engage celebrities for brand or entity-level promotion and prohibiting endorsements of specific financial products or services.
The Common Advertisement Code (CAC) will apply to regulated entities, including stock brokers, depository participants, investment advisers, research analysts, online bond platform providers, portfolio managers, and mutual funds/asset management companies.
“The celebrities shall be allowed to endorse the regulated entity at the brand level or the entity level. Such endorsements may include the name of products or services offered by a regulated entity but may not include any inducement or claim directly or indirectly regarding any specific product or service,” the notification dated October 8 said.
Any advertisement featuring a celebrity would require prior approval from the supervisory body or the SEBI if no such body has been specified for the regulated entity.
The expenses incurred towards celebrity endorsements would not be passed on to the clients or charged to the mutual fund scheme. Such advertisements would include the relevant disclaimers as specified. The regulated entity would be permitted to use only the ratings or rankings assigned by a Past Risk and Return Verification Agency in the advertisement, subject to certain conditions.
On the conditions that ratings or rankings must be properly explained either in the advertisement itself or by including details of the Past Risk and Return Verification Agency website or the regulated entity’s website where an investor can obtain further information about the meaning and methodology of such ratings or rankings.