The factsheet was produced following a string of investigations by Mortgage Introducer highlighting broker concerns over expensive web-based advertising schemes.
It is free to members and available from www.a-m-i.org.uk.
Chris Cummings, director of AMI, said: “Articles, such as those in MI, and our factsheets are all about combating issues in the broker community.
The information was put together as we noticed some of our members struggling to do business under FSA regulation. AMI aims to help our members deal with regulation and in the running of their businesses.”
AMI has moved to clarify any broker misinterpretations on FSA rules over new business development. The factsheet looks at the type of questions brokers need to ask a lead generation company.
Lead generation activities are covered under the FSA regulations, specifically those relating to Financial Promotions. Failure to observe the basic rules could result in criminal sanctions being imposed.
The first rules on Financial Promotions were introduced in section 21 of the Financial Services and Markets Act (FSMA) 2000 and FSMA Order 2001.
Promotions are not just governed by the FSA but they may also be covered by other regulations outside the FSA scope.
Promotions are also affected by, for example, Advertising Standards Authority codes, copyright, trademark protection and confidentiality/data protection issues.
Additionally they are caught under the Privacy and Electronic Communications (EC Directive) Regulations (2003).
The AMI factsheet explains what the regulator defines as lead generation activity, highlighting sections of MCOB and simplifying key FSA definitions.
AMI said there were a number of lead generation companies offering good quality leads to the intermediary market but admitted that less scrupulous firms exist.
AMI stressed that firms needed to be clear about the basis on which leads had been passed to them and that they had the consumer’s permission to proceed with contact. It has printed a checklist members can consider when ‘qualifying’ leads.
The factsheet concludes by reiterating the need for good record-keeping by firms. It also urges them to keep an open mind about developments in the lead generation industry.
Andy Frankish, managing director of Mortgage Talk, said: “It is a very appropriate time to be releasing such a factsheet. Lead generation is still a major concern and brokers must be very careful.
“I agree with the call for the FSA to take action to create a level-playing field for broker firms when it comes to advertising, fee disclosure and lead generation.”
Steve Brockman, director of A2B Mortgage Co, a broker who had previously paid money for web-advertising which failed to produce any business, said: “Anything that can help stop firms from getting stitched-up has to be a good thing.”
