New Delhi, July 1 -- Securities and Exchange Board of India (Sebi)'s proposal to allow endorsements by celebrities, including influencers, by mutual fund houses is facing resistance from sections of the industry, with executives warning that the move could encourage mis-selling among retail investors while tilting the competitive landscape further in favour of larger asset managers.

In a consultation paper issued last week, the markets regulator proposed a common advertisement code for Sebi-regulated entities such as mutual funds, brokers, investment advisors, research analysts, and so on. One of the recommendations was to allow celebrity endorsements, on a pre-approved basis, for asset management companies (AMCs), a provision restricted...