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Prior to 2004 there was little regulation for mortgage brokers conducting business in the UK. Anybody could call themselves a mortgage broker, regardless of whether or not they held the necessary qualifications, and they could source clients and conduct their businesses in any way they chose to.

However the Financial Services Authority introduced a strict regime of regulation on 31 October 2004. Mortgage brokers were forced to obtain industry approved qualifications and conduct their business in accordance with the FSA's rules and regulations.

One rule that was introduced on that date eliminated the ability of mortgage brokers to source clients through cold calling. Cold calling involves phoning people at random without any prior consent given by the individuals. It is a technique that was used by many mortgage brokers to find new customers prior to the new rules coming into effect.

This meant that mortgage brokers who relied on cold calling to expand their customer base were forced to invent new ways of finding clients. Because of this, lead generation companies began to emerge that generate leads for mortgage brokers who do not have the ability to do it themselves.

The lead generation companies are mostly internet based and gather leads through websites. This type of business activity is mostly unregulated by the FSA as it is not the mortgage brokers themselves who are gathering the leads. Some rules do exist for lead generators including that they are required to advise visitors to their websites that they will be contacted by an independent mortgage broker. The leads must then be sold to an independent broker rather than a tied advisor.

Despite this, lead generation is not considered to be cold calling and would therefore not endure the wrath of the industry regulator with regards to the ban on this activity. Generating leads with the purpose of calling back the clients would be considered a *warm lead* rather than cold calling.

However, mortgage brokers and the general public should be aware that a minority of lead generation companies have used unscrupulous means to obtain data for potential mortgage customers and have sold it to mortgage brokers disguised as qualified leads. If you receive a phone call from a mortgage broker and you did not submit your details online for this purpose you should contact the authorities.

Mortgage brokers who buy such leads will then call the potential clients only to find that the leads are not genuine. This means that the mortgage broker has effectively made a cold call to that member of the public because they have not given prior approval for the mortgage broker to contact them. This is a potentially dangerous situation for a mortgage broker to find themselves in so all efforts should be made to stamp out this practise.

Mortgage brokers should be careful to ensure that any mortgage leads they purchase are genuine. There are several large lead resellers operating in the UK who have excellent methods for filtering out invalid leads. High quality lead resellers will also offer mortgage brokers refunds on all invalid leads.