CMCOB 2.2 Generating, obtaining and passing on leads

CMCOB 2.2.1G
  1. (1)

    1The Principles (in particular Principle 6 and Principle 7) apply to actions of a firm dealing with a claim or a customer whose details the firm has obtained from a lead generator. For example, where there is a possibility that the lead generator is using misleading information, advice or actions to obtain a customer’s personal data, acting on those sales leads could amount to a breach by the firm of Principle 6 and Principle 7.

  2. (2)

    The definition of “customer” in the Glossary includes a person who may have a claim and either (i) may use the services of a person who carries on a regulated claims management activity or an activity which would be a regulated claims management activity but for the exclusion in the Regulated Activities Order; or (ii) in respect of whom a person carries on the regulated activity of seeking out, referrals and identification of claims or potential claims or an activity which would be the regulated activity of seeking out, referrals and identification of claims or potential claims but for an exclusion in the Regulated Activities Order. An individual who is contacted by a lead generator, or whose details are obtained by a lead generator and passed on to another firm, is, therefore, a customer of both the lead generator and, where relevant, that other firm.

Requirements relating to use of a lead generator

CMCOB 2.2.2R
  1. (1)

    1A firm that accepts or proposes to accept sales referrals, leads or data (including details of claims or of customers) from a lead generator must:

    1. (a)

      ascertain whether the lead generator is an authorised person with a permission to carry on seeking out, referrals and identification of claims or potential claims; and

    2. (b)

      satisfy itself as to whether the lead generator has appropriate systems and processes in place to ensure compliance with (i) and (ii) (including that the referrals, leads or data have been obtained in compliance with (i) and (ii)):

      1. (i)

        data protection legislation; and

      2. (ii)

        the Privacy and Electronic Communications (EC Directive) Regulations 2003 (or, if the lead generator is established in an EEA State but has no establishment in the United Kingdom, the equivalent legislation in that EEA State).

  2. (2)

    The firm must take the steps required by (1):

    1. (a)

      before accepting sales referrals, leads or data from a particular lead generator for the first time; and

    2. (b)

      if the firm continues to accept sales referrals, leads or data from that lead generator, at appropriate intervals.

  3. (3)

    If the lead generator is not an authorised person with a permission to carry on seeking out, referrals and identification of claims or potential claims, the firm must take reasonable steps to satisfy itself that the lead generator may carry on that regulated activity without breaching the general prohibition.

  4. (4)

    The firm must keep a record of the steps it has taken under (1), and its conclusions in relation to (1)(a) and (1)(b).

CMCOB 2.2.3G
  1. (1)

    1A firm may ascertain whether a person is an authorised person by checking the Financial Services Register on the FCA website.

  2. (2)

    In order to comply with CMCOB 2.2.2R(1)(b) the FCA expects firms and lead generators to ensure that they are aware of any requirements to obtain consent under:

    1. (a)

      regulation 21A of the Privacy and Electronic Communications (EC Directive) Regulations 2003 (the cold calling ban);

    2. (b)

      data protection legislation; and

    3. (c)

      any guidance published by the Information Commissioner’s Office in relation to data protection legislation and the cold calling ban.

  3. (3)

    In satisfying itself as to whether a lead generator has appropriate systems and processes in place to ensure compliance with data protection legislation, a firm should consider, in particular, the procedures by which the lead generator obtains customers’ personal data and customers’ consent to the use (including the acquisition, storage and sharing) of that data and whether there is consent to use it in the firm’s intended marketing.

  4. (4)

    Firms are reminded that, under data protection legislation, they must have consent from the customer to process the customer’s personal data, for example to contact the customer or to pass their details on to a third party, unless one of the other conditions which renders the processing of that data lawful is satisfied. In this context, the FCA would normally expect firms to obtain consent and would only expect firms to be able to rely on the legitimate interests condition (under article 6(1)(f) the General Data Protection Regulation (EU) No 2016/679) very occasionally. Where the firm relies on consent which has been obtained by a lead generator, the firm should satisfy itself that the consent was properly obtained, and clearly covers both the firm and the use that the firm intends to make of the customer’s personal data. In relation to consent, firms are also reminded of the requirements in article 7(2) of the General Data Protection Regulation (EU) No 2016/679.

  5. (5)

    In satisfying itself as to whether a lead generator has appropriate systems and processes in place to ensure compliance with the Privacy and Electronic Communications (EC Directive) Regulations 2003, a firm should consider, in particular, the systems and processes the lead generator has in place to ensure compliance with the prohibition of cold-calling in relation to claims management services (regulation 21A) and the requirements in relation to the use of electronic mail, including text messages, for direct marketing purposes (regulation 22). The Regulations also contain restrictions on marketing by fax, email and text message and apply to both the caller/sender of the marketing (e.g. the lead generator) and the instigator (e.g. the firm, where the lead generator is acting on behalf of the firm). Both the instigator of the marketing and the business carrying out the marketing may be subject to enforcement action if any breaches occur. Firms should therefore ensure that any marketing carried out on their behalf by a lead generator is compliant.

  6. (6)

    A firm should have regard to the frequency with which it accepts leads from a lead generator when determining what an appropriate interval is at which it should take the steps required by CMCOB 2.2.2R: the more frequently it accepts leads from that lead generator, the shorter should be the interval; and where the firm accepts leads from the lead generator on an ongoing basis, it should take those steps regularly.

Recording the source of sales referrals, leads or data

CMCOB 2.2.4R

1Where a firm accepts a sales referral, lead or data, or details of a claim or of a customer, from a lead generator, the firm must keep a record of the lead generator from whom it accepted that lead or those details for at least three years.

CMCOB 2.2.5

[Not used]1

CMCOB 2.2.6R

1If the firm is not satisfied as to the matters in CMCOB 2.2.2R(1)(b), it must neither accept sales referrals, leads or data from that lead generator nor use sales referrals, leads or data obtained from that lead generator.

Notifying the FCA if a lead generator is not authorised

CMCOB 2.2.7R
  1. (1)

    1If the lead generator is not an authorised person with a permission to carry on seeking out, referrals and identification of claims or potential claims and the firm is not satisfied that the lead generator may carry on that regulated activity without breaching the general prohibition, the firm must:

    1. (a)

      promptly notify the FCA in writing, using the form at SUP 15 Annex 4R; and

    2. (b)

      neither accept sales referrals, leads or data from that lead generator nor use sales referrals, leads or data obtained from that lead generator.

  2. (2)

    A notification under (1)(a) must include:

    1. (a)

      the identity of the lead generator and, if known, contact details for the lead generator; and

    2. (b)

      the firm’s reasons for not being satisfied that the lead generator may carry on seeking out, referrals and identification of claims or potential claims without breaching the general prohibition.

Provision of information by lead generators

CMCOB 2.2.8R
  1. (1)

    1This rule applies to a firm from the time at which it could reasonably be expected to know or suspect that it is going to:

    1. (a)

      pass the customer, or details of a customer or of a claim, to a third party, or give details about the third party to a customer; and

    2. (b)

      receive a payment from the third party in relation to the firm doing so.

  2. (2)

    The firm must, in its financial promotions and in any communication with the customer, include a prominent statement to the effect that the firm receives payments from third parties to whom it passes customers, or the details of customers or of claims, or whose details it passes to customers, in respect of doing so.

  3. (3)

    If a communication relates to a claim which may be made by a customer, without using the services of the firm and without incurring a fee, to a statutory ombudsman or statutory compensation scheme the firm must ensure that the communication contains a prominent statement to the effect that:

    1. (a)

      the customer is not required to use the services of a firm which carries on regulated claims management activity to pursue their claim; and

    2. (b)

      it is possible for the customer to present the claim themselves for free, either to the person against whom they wish to complain or to the relevant statutory ombudsman or statutory compensation scheme.

  4. (4)

    Where the communication is made by voice telephony, the firm must comply:

    1. (a)

      with (2) at the start of the call; and

    2. (b)

      with (3) as soon as the firm knows the sort of claim to which the communication relates.

  5. (5)

    The firm need not comply with (2) or, as relevant, (3) if it has previously complied with those rules in respect of that customer within the previous month.

CMCOB 2.2.9G
  1. (1)

    1CMCOB 2.2.8R applies to lead generators, and to other firms which generate leads, as soon as there is a possibility of customers, or the details of customers or of claims being passed to another person.

  2. (2)

    Examples of a firm receiving a payment from a third party in relation to doing any of the things mentioned in CMCOB 2.2.8R(1)(a) include (but are not limited to):

    1. (a)

      the third party paying the firm a fee for each sales referral or lead it passes on; and

    2. (b)

      the third party making a monthly, occasional or a one-off payment to the firm irrespective of how many sales referrals, or leads or data the firm actually passes on and irrespective of how this might be described (for example as a ‘marketing budget’).

  3. (3)

    Where that rule applies to telephone calls, it applies in respect of both incoming and outgoing calls, including voice telephony over the internet.

  4. (4)

    The guidance at CMCOB 3.2.8G also applies in relation to CMCOB 2.2.8R(3).

  5. (5)

    Firms are reminded that section 56 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 prohibits the payment and receipt of fees for the referral of legal services in cases involving personal injury or death.