It is not quite a case of poacher turned gamekeeper.
But it is a slight change of focus for Alain Desmier (pictured), once head of a lead generation firm. He now runs Contact State - set up last year to help insurers and intermediaries avoid unscrupulous financial promotions, or lead generation companies that dupe consumers searching online into thinking they have clicked on a legitimate financial website.
The companies tend to promise rates and quotes that are neither real, nor representative of the insurer or intermediary whose products they are promoting.
“Right now we are working with a number of insurers and intermediaries to essentially regulate the marketing partners they work with,” says Mr Desmier.
“It is a bit of a Wild West now. If you wanted to set up a lead generation firm tomorrow or today even, you could go and buy the name, design the website, put a few ads up and almost immediately you could start selling regulated leads.”
Prior to setting up Contact State, Mr Desmier ran a lead generation business called E-Finity Leads, which was sold in 2018.
He set up Contact State to address the problem that is also now of concern to the government and regulator.
Every day thousands of people go online looking for insurance.
But in recent years a rogue element has entered this chain: a small number of mainly offshore lead generators have been producing fraudulent advertising as well as mishandling and reselling consumer insurance data, according to a report co-authored by LifeSearch and Contact State in June this year.
The report explained: “If a consumer today responds to a life insurance advert, there will be as many as six different platforms and companies involved in managing the mechanism of the transfer of that data.
“As well as being potentially porous, the process is opaque and members of the chain are largely unaware of each other with very different expectations and metrics for success.
“A consumer may have unknowingly already interacted with three different platforms and businesses before they enter a regulated environment where the actions of advisers are scrutinised. This raises the problem of data broking and the security of valuable, sensitive personal data; there is no single way to prevent data being sold more than once.”
As a result, a consumer not actually in the market to buy protection yet is also being routinely targeted and retargeted with adverts that suggest that life insurance is a cheap, disposable product.
Vulnerable consumers
At a time when Covid-19 has made people more vulnerable to scammers, this issue has become a big cause for concern.
A key part of Contact State’s business model is that any lead generation company that wants to sells leads to an insurer or intermediary that is partnered up with Contact State has to integrate its system into Contact State’s technology.
When the consumer details have been sent from the lead generation company, Contact State will provide ‘data receipts’ to the insurer or intermediary that prove conclusively how a consumer was advertised to and if they gave their consent to be contacted.
Mr Desmier says this forces the lead generation company to act more responsibly because its actions are being logged.
“One of the problems is that if you are a consumer right now looking for health insurance or life insurance, there are a lot of different adverts that are displayed and you have no real way of knowing if they are legitimate or not.
“The Financial Conduct Authority has lost control of financial promotions because the speed at which digital media has moved means it does not know who is advertising what/who is giving out what adverts.
“If a website and firm are using our technology, they will know whether the advert the consumer has seen is legitimate or not.”
When Mr Desmier set up E-Finity Leads he made a full application to be directly authorised by the FCA, something he says many of the leading lead generation companies take upon themselves to do to add differentiation.
As well as regulatory scrutiny, it meant that all the adverts he ran and landline pages needed to be approved through a process internally.
When he sold E-Finity after getting a good offer, he decided that with all the knowledge he had built he would set up Contact State, described as an advertising intelligence platform.
Mr Desmier says businesses that generate leads without the level of scrutiny brought by being directly authorised are largely anonymous and hard to trace – often offshore.
“There should be far more checks and balances to ensure consumers are protected.”
Mr Desmier does, however, note that there are “lots of excellent” compliant lead generation companies in the UK.
Regulation
But who is keeping a close enough eye on the bad ones?
A consultation period has just closed on HM Treasury’s consultation on a regulatory framework for approval of financial promotions.
As reported by FTAdviser, the Treasury warned the “variety and vast quantity” of products being offered on the market meant the requirement for lead generation companies to secure approval from an authorised business “no longer provided a strong enough safeguard”.
So additional safeguards are needed to ensure consumers are protected from deficient or potentially harmful financial promotions.
The government is proposing that authorised companies obtain specific FCA consent before approving the financial promotions of unauthorised companies.
To offer further protection to customers, Mr Desmier says Contact State is planning to build a consumer-facing tool so that when the customer clicks on a website they can clearly see on the site that it has received a stamp of approval-type notification from Contact State.
Ima Jackson-Obot is deputy features editor of Financial Adviser and FTAdviser
Career highlights:
2019-present: Founder of Contact State
2012-2018: Founder of E-Finity (renamed to Candid in 2019)
2007-2011: Director of LeadPoint, a Californian technology business
