Online regulation would push work towards advisers

28 June 2010

At the time of writing everyone is speculating about what the demise of the Financial Services Authority will mean for them, and the lead generation sector is no different.

The FSA has been pretty hands-off where lead generation is concerned despite many calls for it to get more involved.

While we are voluntarily FSA-regulated the only rules that affect leads are those concerning express consent and financial promotions. and can’t put in an advertisement which may generate a lead, while express consent means a company can’t cold call a consumer without them expressly stating they wish to be spoken to.

Lead generators interpret the rule of express consent in various ways.

For example, we think it means that a borrower needs to know who is going to phone them before they submit their request for advice as that’s the only way they can choose not to give their consent.

Other lead generators send a broker’s details to the borrower after they have asked for advice. If this proves to be non-compliant it is you, the broker, who is liable for the approach.

But there could be changes afoot. The FSA, the Association of Mortgage Intermediaries and the European Union have all noted the rise in the number of consumers turning to the internet to research mortgages and other financial products.

Websites may limit the information they provide, pushing consumers towards using brokers

These organisations are becoming interested in the process borrowers go through from the point at which they turn on their computers to the moment brokers offer them advice.The focus for the EU is the question of when the advice process starts.

Is it when a consumer first speaks to a broker or when they see their first online advertisement or look at a price comparison table?

The EU increasingly seems to think the advice process begins when consumers look at a website that is providing them with relevant information.

AMI and the FSA are more interested in the fate of consumers and whether they are being treated fairly or misled by websites, online adverts or at any other point in the process of researching a mortgage deal.

So how will this affect you and the leads you buy?

Well, if there is increased regulation either by the new Consumer Protection and Markets Authority or by the EU it could mean that much of the information currently available on websites is deemed to be advice.

If this is the case it is bound to force websites to limit the information they provide and push consumers towards seeking advice from brokers.

This may have a dramatic effect on the number of consumers coming through lead generators as it could substantially increase the total number looking for advice by this route.

There could also be a rise in the quality of leads as rules about what constitutes express consent on websites become increasingly strict.

Both these scenarios would be good news for brokers and while they may be just possibilities at the moment, anything that means you get more and better business must be a good thing.

 

If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat