Calling in from the cold

With a general election due in the UK in the next twelve months, every political party is planning proposed legislation for easy-to-understand problems.  Financial cold calling is one such headline grabbing issue and after years of inaction it appears there is now enough political capital for regulators and politicians to address misleading marketing firms. 

From endless promises of a cheaper (but never better) life insurance plans to life savings being drained by fraudulent investments, the danger of a financial cold call is a problem easily understood through personal experience. Contact State research in October 2022 found that the average person in the UK receives five cold calls a year for a variety of products. 

"Scammers devastate lives and livelihoods. We have to prevent fraudsters from infiltrating their way into people’s lives in the first place", said Prime Minister Sunak in May 2023, a day before the local elections in England and Wales. 
In this Contact State feature, we take a closer look at what’s being proposed and what it means for you and your business. 
What is cold calling? 

The practice of calling a consumer without their consent, with the purpose of selling them something. Consumers that are tricked into parting with their personal data for purposes they don’t understand are also increasingly targeted in cold calling campaigns and the link between misleading websites and resold data is clear

The UK is slow to deal with the role that consent plays in telemarketing for financial products. In the US for example, the Telephone Consumer Protection Act (TCPA) requires all marketing firms to have proof of ‘explicit consent’ before they make an outbound phone call to a consumer or face fines and law suits.  

Cold calling in the UK is a symptom of a much wider problem, that of an unregulated and unchecked trade and exchange of personal consumer details for marketing purposes. Even very large financial networks, brokers and insurance firms often accidently end up working with cold call scammers. 
Why isn’t cold calling already illegal?  

Complexity, political inaction and impotent enforcement 

The problem of regulating and stopping cold callers cuts across several major regulators, government departments and vested interests; Ofcom, FCA, ASA and the ICO have all independently introduced measures to tackle misleading advertising and ‘consent-less’ calling, but have lacked the direction, support and leadership from central Government to truly produce measures that cut through the problem. 

- The ICO have been increasing measures and fines aimed at tackling businesses that fraudulently use consumer data without permission and the rules around ‘Live Marketing Calls’ released last year was a big step forward .

- The ASA too have a whole section of their website dedicated to misleading lead generation but their measures of enforcement are voluntarily.

- The FCA’s Consumer Duty (due to be implemented in July 2023) explicitly tackles unauthorised marketing journeys and as Contact State noted at the time, the new rules effectively require data buyers to evidence how a consumer has ended up in a financial firms calling schedule. 
…all great steps in the right direction but what all of these measures lack is enforcement and more specifically, power for a consumer to complain if they feel like they’ve been the victim of a cold call.  

The initial draft of the Consumer Duty paper contained a proposal around a Private Right of Action (PROA) which would have allowed consumers themselves to take legal action against businesses that cold called them or mis-sold them products. It was watered down after ‘industry ojections’ but the FCA warned at them time it would be back. It feels increasingly like that UK is about to have a TCPA moment. 
What does this mean for lead generation?
If you sell products and services via lead generation, generate or sell consumer lead data or just have a form that captures consumer data with marketing permissions, you are going to need to be ahead of the next set of changes in what will become an increasingly febrile and fast moving environment. 

Contact State believe the following three things are likely to happen in the future, in response to Government focus on cold calling.

1. Required naming of the lead buyer on lead generation websites 

In line with the changes outlined by the ICO in Live Marketing Calls, it feels increasingly likely the ICO will no longer accept as legitimate, websites that offer to ‘connect’ consumers to product providers and will instead demand that lead gen websites name the buyer the consumer is going to be sold to, before the consumer presses submit.

2. Required verified proof of consumer consent 

The private right of action (discussed above) is an idea so straight forward and simple its hard to see how this TCPA style of data regulation is not adopted sooner rather than later. The impact of such a measure which would mean all lead buyers would need to keep an independent proof of consent for each lead they buy.

3. Focus on affiliate networks and hot key practices 

It is odd that in 2023 lead generation affiliates network are still able to operate an ‘auction’ for consumer data. A murky trail of resold data and questionable consumer journeys will make affiliate network lead generation as well as the even murkier process of ‘hot key’ lead generation pass modern data compliance standards. 
Cold calling will continue to be a hot topic 

The Government focus on cold calling, lack of consent and misleading advertising is welcome and not before time. The pandemic exposed the lack of protection for a society that has rapidly adopted digital and ‘from home’ methods of buying financial products and its clear that consumer protection has not kept pace.  

Right now the regulatory promises (as initially proposed in the government press release in May 2023) are designed for headlines. We need to see a sustained level of pressure and robust legislation introduced if we’re going to end the practice of cold calling but we’re closer than we’ve ever been. 


To find out more about how Contact State supports businesses gain oversight over marketing journeys, consumer consent and lead generation process click here 

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