Now, MCA also warns people against celebrity ads, misleading claims in financial products

Vindicating the stand taken by Moneylife Foundation, the ministry of corporate affairs has warned people against celebrity endorsements and misleading claims in financial products

The Ministry of Corporate Affairs (MCA) has vindicated the stand taken by Moneylife Foundation against celebrity endorsement and misleading claims made in advertisements related with financial products. Through an advertisement aired on radio, the MCA is urging consumers not to believe in celebrity endorsements. It also advises companies not to waste money based on celebrity endorsements and advertisements.

Four years ago, Moneylife Foundation had petitioned against celebrities endorsing financial products because they were complex and not like colas or consumer product.

An official from the MCA told the Economic Times that “The advertisement is part of a larger campaign to educate investors. It is not just celebrity endorsements that we are targeting. The ministry is likely to do more such advertisements through the year so that investors don't get swayed by misleading TV commercials.”

The MCA advertisement, which airs on All India Radio (AIR) FM channel, is conversation between friends. It explains that, how a company that is spending a lot of investors’ money on endorsements that cannot give higher returns and one should be careful before investing in such company.

Monylife Foundation Trustee Sucheta Dalal, while talking at interactive session on how to hold irresponsible advertisers accountable, emphasised that there is a need for a common code that brings banks and insurance companies on par with mutual funds. “While toxic insurance products were sold to the gullible investors nothing is being done to stop false advertisements. Since the banking regulator has no rule on misleading advertisements, banks too can get away by mis-leading consumers by showing a higher return,” she said.

The Securities & Exchange Board of India (SEBI) is the only regulator to fix the problem of mis-selling of mutual funds. However, Insurance Regulatory and Development Authority (IRDA) and Reserve Bank of India (RBI) are still asleep on celebrity endorsement of financial products. SEBI said, mis-selling is not restricted to false statements, but can also happen by ‘concealing or omitting material facts’ or ‘concealing associated risks’ and not taking care to ensure ‘suitability of the scheme to the buyer’.

SEBI has stringent rules for initial public offering (IPO) ads as well as mutual funds. As we all hear, "Mutual fund investments are subject to market risks, read the offer document carefully before investing”. SEBI had asked the advertised to slow down its speed from the fast one. It also mandated companies to use fixed and readable size for fonts used in disclaimers. SEBI insist that the disclaimer should be displayed for minimum six seconds and must be coherent and comprehensible as per its regulation.

Celebrity endorsing shampoo and soaps is far different than celebrity endorsing mutual fund or any financial products. Especially when the celebrity is not fully aware of the financial product he/she is endorsing and makes tall claims about it. We come across many advertisements including Amitabh Bachchan, Irfan Khan and Sachin Tendulker selling insurance policy and child plans.

All advertisements were so appealing and made financial products seem simple, safe & so- easy to buy, but the reality is far different than what they show. The celebrity Actor Irfan Khan saying ‘Kum Inusrance lene ki bimari’ while endorsing Aegon Religare Insurance is the same company having maximum rejection of claims. Moneylife Earlier wrote about, Aegon Religare: ‘Kum’ insurance ‘dene ki bimari’.

 The 71-year-old Bollywood mega star, Amitabh Bachchan in one famous commercial advertisement claims buying an insurance policy is two minutes task like cooking two minute noodle, which is also endorsed by him. However, as we all know the reality is buying Insurance policy requires a lot of time and in-depth research.

Recently, the super star said that “his conscience had made him stop endorsing Pepsi after a school girl in Jaipur asked him why he promoted the soft drink that her teacher branded as poison.”

He stated this while addressing an interactive session on celebrity endorsements at the Indian Institute of Management, Ahmedabad (IIM-A) according to the report.

Last week, The Central Consumer Protection Council (CCPC) under the chairmanship of minister, KV Thomas set up a sub-committee to draft guidelines to safeguard consumer interest from false advertisements in the country. According to reports from Times of India, The panel discussed the tall claims made by advertisers and the need for celebrities endorsing products to be liable for misleading advertisements.

As per The Companies Act, 2013, “Any person who makes a promise or forecast that is false shall be punishable with jail of six months, extending up to 10 years.” While earlier under the Companies Act, 1956, punishment for such an offence was limited to a fine.


However, to punish a celebrity endorser, it has to be proved that whether celebrity person made the representation "recklessly", without ascertaining the facts, or he was aware that the statement was false or misleading.


You may also want to read…

Tackling False and Misleading Ads

Can we hold celebrities responsible for products that cheat?

Misleading financial advertisements

What’s trending in misleading ads in 2014?

Protesting against misleading ads by the state

False Advertising & Corporate Governance

Mechanism to deal with misleading ads soon: Thomas




3 years ago

Was it his conscience or his age that disallowed him from doing the Pepsi commercial? Pepsi also might have needed some young blood to boost sales :)

BTW if he really believes in the product he endorses, is the same applicable to Aadhar?

Bank unions call two days strike as ‘total success’

Bank unions have warned to intensify their agitation if Indian Bank's Association-IBA and the government does not come forward to resolve their pending issues

United Forum of Bank Unions (UFBU), the umbrella organisation of five employee unions and four officer unions of state-run banks in the country, has called its two days strike as 'total success'.

About 10 lakh bank employees from nine unions, All India Bank Employees' Association (AIBEA), All India Bank Officers Confederation (AIBOC), National Confederation Of Bank Employees (NCBE), All India Bank Officers Association (AIBOA), Bank Employees Federation Of India (BEFI), Indian National Bank Employees Federation (INBEF), Indian National Bank Officers Congress (INBOC), National Organisation Of Bank Workers (NOBW) and National Organisation Of Bank Officers (NOBO) participated in the 48-hour strike between 10-11 February.

"The strike was called to demand immediate wage revision for bank employees and officers and to protest against retrograde banking sector reforms like privatisation of public sector banks, granting licence to corporate houses to start their own banks, encouraging foreign banks to take over our banks and siphoning out huge amounts through write off of bad loans of corporate defaulters," said CH Venkatachalam, general secretary, AIBEA in a statement.

Commenting on finance minister P Chidambaram's statement that entire profits of banks cannot be utilised for enhancing wages of employees, Mr Venkatachalam said, "That is not our demand also. We are only asking for a reasonable increase in wages that too when banks are making good profits."

Reiterating that bank employee unions are ready to resolve the issues by discussions, he said, "UFBU is always open to resolve the demands by discussions and negotiations but Indian Bank's Association (IBA) and the government should also be forthcoming. If the same negative attitude will continue, we will be left with no alternative than to further intensify the agitation. UFBU will be meeting shortly for this purpose."


Sensex, Nifty to come under pressure again? : Tuesday closing report

Six days are over since the Nifty made a low at 5,933 during eight days of decline, but the index has not even retraced 50% of the fall. This indicates that the bulls are not confident

As we had mentioned in Monday’s closing report, the Indian benchmark indices tried to keep itself in the green. Today after a volatile session, the BSE 30-share Sensex managed to cover more than half of yesterday’s loss, while the NSE 50-share Nifty managed to make up for yesterday’s entire negative move. Today, the Nifty moved almost in the same range as yesterday while continuing to make an attempt to reach up to the level of 6,100.


The Sensex opened at 20,401 and moved in the range of 20,350 and 20,443 before closing at 20,363 (up 29 points or 0.14%). The Nifty, which opened at 6,072, hit a low of 6,053 and moved higher to hit a high of 6,082 before closing at 6,063 (up 9 points or 0.15%). The NSE recorded a volume of 47.37 crore shares.


Among the other indices on the NSE, the top five gainers were Auto (0.99%); IT (0.95%); Finance (0.53%); Service (0.44%) and Metal (0.37%) while the top five losers were Media (1.33%); Energy (0.91%); Realty (0.80%); Infra (0.51%) and Pharma (0.47%).


Of the 50 stocks on the Nifty, 25 ended in the green. The top five gainers were HCL Technologies (4.35%); Ranbaxy (2.99%); Tata Motors (2.76%); Tata Steel (2.43%) and BPCL (1.63%). The top five losers were NTPC (2.92%); Reliance (2.21%); PNB (2.16%); Hindalco (2.11%) and Hero MotoCorp (1.91%).


Of the 1,492 companies on the NSE, 645 closed in the positive, 753 closed in the negative while 94 closed flat.


The fall in Nifty from 6,346 on 23rd January lasted for eight days and 413 points. Now, six trading days are over since the Nifty touched a low at 5,933, but the index has not even retraced 50% of the fall. This indicates that the bulls are not confident. Now, only a strong US market can bring back the bulls.


Reliance Industries was among one of the top five losers today in the pack of Sensex 30 stocks. Delhi chief minister Arvind Kejriwal said he has asked for legal cases to be filed against Reliance Industries Chairman Mukesh Ambani and policymakers over pricing of gas produced from the D6 block in the east coast. Kejriwal alleged that the company has created an artificial shortage of fuel in the country. Kejriwal said he would ask the central government to suspend the latest order on gas pricing pending an inquiry.


India's trade deficit narrowed to $9.92 billion in January 2014, from $10.14 billion in December 2013, data released by the government on Tuesday showed. On year-on-year basis, merchandise exports rose 3.79% to $26.75 billion in January 2014. Imports fell 18.07% year-on-year to $36.67 billion led by a 77% drop in gold and silver imports on the year.


The emergence of an Indian coalition government of smaller parties after elections this year may weaken the rupee and heighten risks to the nation’s credit ratings, Moody’s Investors Service said today. Moody’s rates India’s long-term foreign currency and local-currency debt at Baa3, the lowest investment grade, with a stable outlook. US indices closed marginally higher on Monday.


Federal Reserve Chairman Janet Yellen delivers her first testimony on monetary policy later in the global day today, 11 February 2014. Yellen will speak on monetary policy and the outlook for the US economy for the first time since being sworn in as the central bank's head.


All the Asian indices trading today closed in the positive. Hang Seng was the top gainer which rose 1.78%


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