SEBI Harnesses AI Technology to Enhance Detection of Mis-Selling Practices

SEBI Leverages AI to Combat Mis-Selling in Financial Sector

At the Mutual Fund Summit, Amarjeet Singh, Whole-Time Member (WTM) at Securities and Exchange Board of India (SEBI), highlighted the regulator's increasing use of artificial intelligence (AI) to detect instances of mis-selling in the financial sector.

SEBI's AI-powered detection capabilities have identified cases of retirement plans being sold to non-individual entities, emphasizing the need for tighter oversight, stronger compliance, and accountability among intermediaries. The regulator can now target key intermediaries where irregularities are detected, ensuring more effective enforcement.

Industry-wide ethical capacity building is crucial in preventing mis-selling, and Singh urged market participants to develop ethics-focused capability modules. Additionally, SEBI is working with the industry to create AI-based tools to curb mis-selling and strengthen ethical practices across stakeholders. The National Institute of Securities Markets (NISM) is also collaborating with the industry to promote ethical practices.

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Technology and ethics must work together to ensure fair investor practices and trust in financial markets.