RegulationDec 29 2021

Advisers warned on lead generation ads as scrutiny increases

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Advisers warned on lead generation ads as scrutiny increases
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Advice firms have been warned to take a "proactive" approach to lead generation compliance next year, as scrutiny on adverts increases.

Alain Desmier, the founder of lead generation platform Contact State, cited Google's recently introduced requirement for all financial advertisers to be authorised and regulated or ‘approved’ by the Financial Conduct Authority as an example of this scrutiny. 

He said these new rules were less about stopping fraudulent adverts and far more about collecting information about who was buying media and where leads were being sent.

“The FCA is going to rely on Google to send it evidence of who is breaking financial promotions rules along with the FCA numbers that have been used to approve those adverts,” said Desmier.

“If you’ve allowed a lead generator to use your FCA number to generate leads, now is the time to take a proactive approach to compliance.”

The FCA is going to rely on Google to send it evidence of who is breaking financial promotions rulesAlain Desmier, founder of Contact State

If a firm has allowed a lead generator to use its FCA number with the Google ad approval process then the firm, not the lead generator, assumes responsibility and liability for any advert the lead generator runs.

Over the next 12 months, Desmier said the industry would welcome “precise, specific and timely” regulatory enforcement, both for lead generation firms and lead buyers. 

“Misleading and fraudulent advertising is something that consumers and political parties alike understand and as the country creeps closer to a possible general election in 2023, advertising regulation will become a political football,” he said.

'Woken up'

Desmier told FTAdviser 2022 would be "the year of regulatory impact” for lead generation firms, as bodies such as the Advertising Standards Authority and the Financial Conduct Authority shifted away from just “looking tough” and took action.

“Fraudulent advertising has been one of the most talked about topics of the year,” said Desmier. “In articles, speeches, webinars and conferences, everyone has seemingly had a view about ‘lead gen’. 

“An industry has woken up to the very real issue that some consumers are tricked into handing over their data and are then resold to multiple businesses, in the guise of financial advice.”

The regulator and financial services industry at large needs to do more than just pretend to be disappointed, we need to take actionAlain Desmier

While Desmier said progress has been made this year, warned it was not enough.

“Ignoring obviously fraudulent lead generation has been replaced with talking about obviously fraudulent lead generation,” he said.

“The regulator and financial services industry at large needs to do more than just pretend to be disappointed, we need to take action.”

Earlier this month, FTAdviser revealed the Advertising Standards Authority was considering reviewing lead generation advertisements for financial services, including insurance.

The regulator said it was “concerned” about the number of “problematic ads” for lead generators it is seeing online, especially given the financial vulnerability some people have faced through the pandemic.

“The ASA has actually been avoiding ruling on insurance and other financial services sectors because this specific industry responsibility lies with the FCA,” Desmier explained.

“News that the ASA will now also make rulings in the insurance industry is big news, because the ASA holds the lead generator and the lead buyer responsible for adverts.”

Some insurers have already conducted company-wide reviews of their advertising, including Neilson’s.

Rulings in 2021 to note

What changed in 2021, according to Desmier, was the various regulatory rulings and precedents which have effectively set the rules of engagement for lead generators and their lead buyers.

“To understand what comes next, we need to understand what's happened. What rules have the regulators created to potentially enforce next year?”

Desmier cited the Information Commissioner's Office ruling against Chameleon marketing in January, for not gaining and storing consumer consent for the leads they had purchased. 

Then in September, the ICO followed up with a £225,000 fine for insurance firm Saga, on the basis it did not gain consumer consent to market its product.

For too long regulatory scrutiny has started from when the consumer picked up the phone rather than from when they responded to an advertisementAlain Desmier

“This was significant as it emulates an American view of data legislation where the data buyer has to prove they are innocent, when challenged,” said Desmier.

In April, another notable ruling, this time from the ASA, passed according to the Contact State founder. This one saw lead buyer Flexible Digital Solutions told it was jointly liable for misleading adverts it used to generate leads. 

“This should make every lead buyer sit up and take notice, if you buy leads you are responsible for the adverts that generate those customer enquiries,” said Desmier.

“In 2021 financial intermediaries and product providers in all sectors began to ask ‘where do my leads and consumer sales come from?’

“For too long regulatory scrutiny has started from when the consumer picked up the phone rather than from when they responded to an advertisement.”

ruby.hinchliffe@ft.com