Do networks have a compliance blindspot when it comes to lead generation?

Thomas Brett, Head of Mortgage and Lending at Contact State explains how the new financial promotion rules will affect large AR networks.  

 

Here at Contact State we’ve documented the new rules Google have implemented, meaning anyone advertising a financial product will need to be FCA registered, or use the FCA number of a registered firm (more often than not, the buyer’s FCA number). 

 

This is a great step forward in ensuring customer journeys are the safest they can be. By ensuring the buyer of the lead is also liable for the compliance and oversight of the advertisements the customer sees on their way to regulated advice, makes sure there is possible recourse for any fraudulent lead generation activity.  

 

With social media sites following Google’s lead in making sure lead generators are regulated or working with a regulated firm, the FCA and ICO are closing the loopholes often used to generate cheaper, less compliant leads to sell on.  

 

However, these new rules, as they come into force, shine light on a potentially huge ‘blind spot’ in the financial advice sector. Large AR networks of financial advisers and mortgage and equity release specialists charge for membership which in turn covers compliance oversight and insurance costs, this enables advisers to work in regulated environments under the network’s FCA number.  

 

This in turn potentially means there are numerous lead generation firms working under the network’s FCA number without their explicit consent or more importantly, their oversight on their advertising campaigns and landing pages. Any fraudulent activity on the customer journey puts the network at risk of falling foul of the regulator’s rules, reputational damage, or worse, hefty fines. The ICO have started to focus on lead generation in 2022 and we can expect these rulings and fines to be much more commonplace going forward. An example here shows fines up to £480,000 for calling enquiries without the customer’s permission to call. Without oversight, networks can’t prove they have that permission.  

 

More oversight and due diligence will be required by the networks to make sure they are properly covered, and their customers are protected. However, this will take an incredible effort and people hours as lead generators can use as many as 50 to 60 different landing pages and journeys for each campaign. The knee jerk reaction would be to ban ARs from using external marketing campaigns to generate leads, but this will remove a large and integral part of many adviser’s businesses and lead streams. This is not the answer, especially when there are alternative options available to ensure lead generation can occur in a safe and compliant manner.  

 

With Network Oversight from Contact State, networks have a complete view of all sellers and campaigns being used for their members. Only approved landing pages which are compliant can send leads to their ARs and with quarterly audits running directly into their risk team, they have the proof they are working hard to ensure all customer journeys, from start to finish are safe, compliant and with minimal risk.  

 

To find out more about how Contact State can help, please don’t hesitate to contact me on the details below.