Investment apps may have to abandon rewards-based customer acquisition under SEBI's proposed ad code

The Securities and Exchange Board of India (SEBI) has dropped a bombshell on investment apps, proposing a ban on the lucrative rewards-based customer acquisition strategies currently dominating the Indian fintech landscape. Released on June 23, 2026, as part of its draft Common Advertisement Code (CAC), this move targets incentives like vouchers, cashback, and other perks linked to opening accounts, reactivating dormant ones, or boosting trading activity. If implemented, this sweeping change will force online brokerages and wealth management apps to fundamentally rethink how they attract and retain users, shifting the focus from promotional offers to product quality and investor education. This proposal is a clear signal of SEBI intensified efforts to safeguard investors and prevent potential mis-selling in India's rapidly expanding digital investment space. The regulator noted a surge in scams using social media and other platforms, often luring investors with promises of 'risk-free profits' or guaranteed returns. The CAC also tackles 'dark patterns'—deceptive digital interface designs that manipulate users into making unintended financial decisions, aligning with broader consumer protection guidelines. Furthermore, this comprehensive code seeks to unify existing fragmented advertising rules across various regulated entities like stockbrokers, mutual funds, and investment advisers, aiming for greater consistency and ease of doing business while enhancing investor protection. With public comments invited until July 14, 2026, the final shape of the Common Advertisement Code is still being debated, but its implications are already reverberating across the fintech industry. Investment apps will likely need to pivot towards more organic growth strategies, emphasizing robust features, competitive pricing, and investor education rather than relying on quick-win incentives. This shift could usher in an era where trust, transparency, and genuine value proposition become the primary drivers of customer acquisition in the Indian securities market.