When is an introducer regulated?
And when are they just passing on leads?
The growth of the internet has led many websites to develop lead generation spaces. New ways to source the same business before the accountants get in there and start shaking their heads.
Lead generation websites is the new new. In the old days it was brochures in dentist waiting rooms, now it is search optimisation and lead generation and cookies for bait.
Website operators need to register as Introducer Appointed Representatives if they introduce for money under formal agreements for commission splits, leads to regulated persons.
This is slightly different to simply selling leads for money unconnected to the final sale and on the open market. But it is even more slippery fish.
The regulatory perimeter is the most baffling part of financial services. What exactly is regulated and where is the boundary? So it was no surprise that last week that the Law Society of England and Wales called for the FCA to simplify things.
“An entire chapter of PERG is required to make the financial promotion regime....comprehensible and, to the extent that it is, workable.”
So say the Law Society- nicely put – followed by an even more delicious “The RAO is a very complicated piece of legislation”. For example, what exactly is a personal recommendation?
“A recommendation is not a personal recommendation if it is issued exclusively to the public.”
Say that again? Exclusively to the public. No wonder Hargreaves Lansdowne have done so well – gaming the regulatory perimeter and making billions from “generic advice” which is not regulated, remember, while us mugs slug away inside a regime that is so wrapped up in bureau tape that they want you to record your clients discussing their marriage endings, personal ailments and plans for the weekend.
"Exclusively to the public".
Carte blanche to introducer websites to dish out advice on the website, and collect leads to sell to you, but they still need to be registered as IARs even if not actually conducting regulated activity. The actual thrust of the Law Society is that the MIFID rules are clearer than the UK rules – in a slight change to Brexit thinking. see here
Amazingly 2017 also started with a headline about precisely this subject – unregulated Pension introducers advising or rather influencing the final advice, which is different means to the same end.
Three tractors doesn’t mean you're in the country, but we do think we have spotted an emerging trend. IFAC have a introducer agreement for sale for £10 that covers this subject. Document Library
So to recap. If you are a regulated firm, you can accept leads from a regulated firm without registering them as an introducer.
However if the introducing firm is NON-REG then you need to either
1. Take the leads on an informal basis - no agreement allowed for commission split. You can give the introducing firm a pint in the pub, but absolutely NOT give them a 40% split of earnings.
2. Enter that non reg firm as an introducer AR firm. Many vets practices, caravan parks and travel agents are set up in this way - when introducing insurance products.
If you are a lead generation website, then IFAC will get you the right permissions and submit your application for you. firstname.lastname@example.org