AMI warns brokers against dubious lead generation firms

The warning comes after mortgage brokers complained to Mortgage Introducer that they have seen an increase in ‘bogus’ advice firms in recent months.

AMI warns brokers against dubious lead generation firms

The Association of Mortgage Intermediaries has warned brokers against doing business with lead generation firms who pose as mortgage brokers.

The warning comes after mortgage brokers complained to Mortgage Introducer that they have seen an increase in ‘bogus’ advice firms in recent months.

Such firms will masquerade as mortgage brokers on LinkedIn and message users to ask if they need mortgage advice.

Such messages often contain false or misleading claims, such as ‘rates from 0.1%’.

Steve Walker, managing director of Promise Solutions, has received several messages from unregulated firms over LinkedIn offering mortgage advice.

He feels such firms not only harm consumers but are detrimental to genuine brokers and the reputation of the adviser industry.

He said: “We are a regulated company ourselves so we know how hard it is for brokers to generate business and how prescriptive the rules and guidance are around financial promotions.

“As FCA authorised firms, we need to be clear, fair and not misleading and document every promotion we produce.

"This puts added burdens on regulated firms, depresses responses and increases costs but we do it because that is what we all signed up for. It protects consumers and amongst regulated brokers we are all on a level playing field.

“Recently there has been a big increase in people or organisations effectively cold calling consumers offering regulated products. These firms and individuals are not authorised and their promotions would not be allowed by any regulated firm.

"Scratch the surface and you will find a whole industry built on unregulated firms / individuals generating leads without adhering to the rules and exemptions.”

Mortgage Introducer showed Robert Sinclair, chief executive officer of the AMI, messages from one such firm and its website - which lists several mortgage lenders and their products and talks about its ‘experienced brokers’ being able to assist with mortgage advice.

Sinclair said: “Given the way the firm is holding itself out to give advice about mortgages I believe it should be operating as a regulated business.

“If people are incensed around such firms I would motivate them to report that entity to the regulator.”

He also warns brokers that the onus is on them when buying leads and they need to carry out thorough due diligence on any firm they are acquiring leads from.

He said: “Brokers should be careful if they are buying from these lead sources that they are not in breach of the rules themselves."

Sinclair believes the market may be seeing a rise in such firms due to advances in technology.

“It is becoming cheaper and easier to create a website that looks really smart and clever,” he added.

Last week, HM Treasury released a consultation into how financial advertising is approved. Brokers are currently responsible for signing off all financial promotions which are used on their behalf – including leads.

Alain Desmier is managing director of Contact State – a firm which works with lead generators and financial firms to supply data certificates for leads.

He said: “The proposals being considered will make regulated financial firms directly responsible and accountable for the adverts of ‘unauthorised’ marketing firms that they work with.

"These proposals have likely been designed to strengthen the regulators oversight and control over rogue lead generators and dodgy distributors of financial products.

“Under the new proposals regulated firms will not be able to work with unauthorised marketing firms unless the regulated firm (the buyer of leads) specifically applies to the FCA for consent to do so. In that submission they will then be asked to demonstrate that they have the relevant due diligence processes required to authorise and control the advertising being produced.”

He added “The FCA and Treasury are taking aim at shoddy, rogue lead generators within the advertising sector by essentially making it harder for them to be approved either by the regulator themselves or by directly authorised firms.”

Desmier welcomes the consultation but stresses that their effectiveness will depend on whether the FCA enforces the rules.

See next month’s Mortgage Introducer magazine for more…