Which Code standards engage when the client arrived because you paid for their details, and when a lead fee becomes a conflict you have to manage.
Figures in this article describe the wider market and are drawn from the third-party sources listed at the end. They are not Lead Foundry results, and nothing here is a projection of what any individual broker will achieve.
An adviser who buys enquiries occasionally worries that doing so weakens their compliance position. It does not, and understanding why is useful, because the real risks sit somewhere other than where the worry points.
This describes how the Code applies to purchased enquiries. It is a description of published standards rather than advice on your own arrangements.
No. The Code of Professional Conduct for Financial Advice Services sets standards for the advice given to a retail client. It attaches to the advice and the relationship, not to how the relationship began. A client who found you through a referral, a search result, or a purchased enquiry is owed the same standard.
The consequence runs in the direction advisers often miss. A purchased enquiry arrives with less context than a referral: no mutual acquaintance, no prior trust, and frequently a consumer who has forgotten submitting the form. Meeting an unchanged standard from a weaker starting position takes more work, not less.
The practical asymmetry: A referred client tells you their situation because they already trust you. A purchased enquiry has to be asked, and the asking is what produces the file that shows the advice was suitable.
| Area of the Code | Why a purchased enquiry stresses it | What to do |
|---|---|---|
| Suitability of advice | You know less about the client at the outset | Ask more, earlier, and record the answers |
| Client understanding | They may not recall enquiring, so context is missing | Name the source brand and re-establish what they wanted |
| Conduct and client interests | Acquisition cost creates pressure to convert | Keep the decision to disengage genuinely available |
| Competence and knowledge | Bought enquiries can fall outside your usual specialism | Filter supply to what you are competent to advise on |
| Record keeping | Nothing about the origin is self-evident later | Keep the source, consent evidence and first-contact notes with the file |
The fourth row is the one most worth acting on before supply starts. Setting your criteria so the enquiries you receive sit inside your competence is a compliance control and a commercial one at the same time.
Usually not in the way advisers first assume. A conflict of the kind that most concerns regulators arises where your remuneration varies with the product you recommend. A lead fee is paid to a supplier for an introduction and does not change based on which insurer or lender you place the client with, so it does not create a product bias.
What it can create is volume pressure. Having paid for an enquiry, an adviser has a financial incentive to convert it, and that incentive is real even though it is not product-specific. The professional answer is to name it rather than to deny it.
The file for a purchased enquiry should be able to answer, months later, how this person came to be your client and what they were told. Four artefacts do that.
The first two arrive with the record if your supplier provides them, which is a reason to weigh that capability when choosing one. The second two are yours.
Anyone giving regulated financial advice to retail clients must hold, or operate under, a Financial Advice Provider licence issued by the FMA. The Code then sets the standards for that advice. Buying enquiries changes neither requirement, and it does not create an additional one.
The FMA reports 1,807 Financial Advice Providers and 1,200 Authorised Bodies engaging 10,743 financial advisers and 12,287 nominated representatives, with 82% of providers having fewer than ten advisers. For a small firm, the practical implication is that the compliance work around purchased supply has to be light enough to actually happen, which argues for building it into the CRM rather than into a separate process.
No. The Code sets standards for the advice given to a retail client and attaches to the advice rather than to how the client was acquired. A purchased enquiry is owed the same standard as a referral, and because it arrives with less context, meeting that standard usually takes more work at the start of the relationship.
A lead fee does not vary with the product recommended, so it does not create the product bias that conflicts rules are principally aimed at. It does create a pressure to convert an enquiry you have paid for. The professional response is to record it in your conflicts register as an acquisition-cost pressure and keep disengagement a genuinely available outcome.
The source brand and submission time, the consent and disclosure evidence the supplier provided, your first-contact note including how you explained the origin of the call, and the information you gathered before advising. Together those answer, months later, how the person became a client and what they were told.
You need to hold or operate under a Financial Advice Provider licence to give regulated financial advice to retail clients, which is what working an enquiry leads to. The licence requirement attaches to the advice rather than to the purchase, so buying enquiries neither adds a licensing requirement nor removes one.