Why a lead can be an introduction
A lead generator usually never meets the customer. It runs adverts, landing pages or comparison tools, captures details and passes them to a lender, broker or insurer that pays for them. It is tempting to see that as a data or marketing business. The financial services question is whether passing those details is effecting an introduction, or making arrangements, in relation to a regulated product.
For credit, a lead generator that passes the details of individuals or small partnerships to lenders or brokers can be carrying on credit broking under article 36A of the Regulated Activities Order. Credit broking covers effecting introductions of individuals and relevant recipients of credit to lenders and to other brokers, and it does not generally depend on speaking to the customer or on the lead converting. Selling the same lead to several buyers through an automated panel or auction does not change the nature of what is being passed on.
Different products engage different activities
A lead generator working across several product types can be inside the perimeter for some and outside it for others. The activity that may be engaged depends on the product the lead is for.
| Lead for | Activity that may be engaged | Guidance |
|---|---|---|
| Personal loans, car finance, credit cards | Credit broking (article 36A) | PERG 2, CONC |
| Business loans for sole traders and small partnerships | Credit broking (article 36A) | PERG 2, CONC |
| Mortgages secured on a home | Arranging regulated mortgage contracts (article 25A) | PERG 4 |
| Insurance | Arranging, as a form of insurance distribution | PERG 5 |
| Investments, including shares and bonds | Arranging deals in investments (article 25) | PERG 2 |
Leads for loans to limited companies are generally outside credit broking because a company is not a relevant recipient of credit. Each of the other activities has its own exclusions, and they are not interchangeable: an exclusion that helps an investment introducer will not necessarily help someone generating mortgage or insurance leads.
Comparison-style sites
Comparison and best-buy sites sit at the edge of lead generation. A site that only publishes general information about products is in a different position from one that ranks products against criteria the user enters, collects application details or hands the user over to a provider part way through an application. The more the site does to help the user towards a particular agreement, the stronger the argument that it is arranging or presenting credit agreements rather than publishing information. For insurance, comparison activity of this kind is expressly within the scope of insurance distribution where the user can go on to conclude a contract directly or indirectly.
Affiliate models raise the same questions. Whether you are paid per click, per lead or per sale can be relevant evidence, but the answer depends on what the site does for the user and what passes to the provider.
Data protection and consent are separate laws
Lead generation is also governed by data protection and electronic marketing law, which the Information Commissioner’s Office enforces. The UK GDPR and the Data Protection Act 2018 govern collecting and sharing personal data, and the Privacy and Electronic Communications Regulations 2003 govern marketing by email, text and phone. Getting consent right under those laws does not make a lead generator compliant with financial services law, and an FCA permission does not satisfy data protection law. Firms that buy leads will usually want assurance on both.
For credit, CONC also contains rules on how credit brokers present themselves to customers, including being clear about the extent of their powers, for example whether they work with one lender or several.
Your adverts are a separate test
The marketing test applies whether or not the lead generation itself is regulated. Adverts and landing pages that invite people to apply for credit, a mortgage or an investment are usually financial promotions under section 21 of FSMA. They must be made or approved by an authorised firm with the right permission, or fall within an exemption. Since 7 February 2024 an authorised firm generally needs a specific permission to approve promotions for unauthorised businesses. Promotions run through social media and affiliates are covered by FCA guidance FG24/1, published in March 2024. How the financial promotion rules work and social media and affiliates
Common misunderstandings
We sell data, not loans
What matters is the effect of what you pass on. A record that lets a lender contact a named person about credit can be an introduction.
Our buyers are authorised, so we are covered
A buyer’s permission covers the buyer. It covers you only if you are its appointed representative and the activity falls within your appointment.
We have consent, so we are compliant
Marketing consent is a data protection question. It says nothing about whether you need FCA permission or whether your adverts need approval.
Our adverts do not name a product
A promotion does not have to name a lender or a product to be an invitation or inducement. The overall effect of the communication is what counts.
When a written opinion helps
A written legal opinion is worth considering when a lender, broker or insurer asks you to evidence your regulatory position before buying leads, when you are adding a new product vertical, when you are building a comparison or eligibility tool, or when an advertising platform asks about your status before running financial services adverts. The opinion looks at your user journey, your data flows and your contracts with buyers. How written opinions work
Primary sources
- Regulated Activities Order, article 36A: credit broking
- Financial Services and Markets Act 2000, section 21: restrictions on financial promotion
- FCA Handbook, PERG 5: insurance distribution activities
- FCA Handbook, PERG 8: financial promotion and related activities
- FCA Handbook, CONC 3: financial promotions and communications with customers
- Privacy and Electronic Communications (EC Directive) Regulations 2003