ASIC review highlights risks for licensees using lead generation services

ASIC has released Report 845: Lead generation advice models – Putting consumers and licensees at risk (REP 845), identifying significant deficiencies in the oversight and supervision of third-party lead generation arrangements by Australian financial services (AFS) licensees.

The report follows ASIC’s review of 15 AFS licensees and their representatives and highlights the regulatory and compliance risks associated with lead generation arrangements, particularly those involving superannuation switching and personal financial advice.

Key findings from the review

ASIC identified instances where unlicensed or unqualified lead generators were undertaking activities that should have been performed by authorised financial advisers, including gathering client information, assessing risk profiles and discussing advice recommendations.

The review also identified potentially misleading representations, high-pressure sales tactics and inappropriate comparisons of investment performance used to encourage consumers to switch superannuation funds or investment products.

Of particular concern were deficiencies in licensees’ supervision and monitoring arrangements, including:

• Limited access to recordings of conversations between lead generators and prospective clients;
• Excessive reliance on manual supervision processes;
• Inadequate monitoring of financial product recommendation patterns; and
• Insufficient controls over the volume of clients referred to individual advisers.

These findings demonstrate the risks arising where licensees rely on third-party providers without adequate oversight of their activities.

The extent of lead generation arrangements

The review highlighted the significant scale of lead generation activity within the financial advice sector.

Between January 2025 and June 2026, lead generators referred 7,639 new clients to financial advisers across the 15 licensees reviewed, representing approximately 35% of all new clients.

These referrals resulted in more than $678 million being switched or invested, approximately 90% of which came from superannuation savings. Advice businesses received $9.8 million in initial fees, with commitments for a further $4.5 million in ongoing fees.

The findings highlight the importance of ensuring that commercial incentives and referral arrangements do not compromise the quality of financial advice or client outcomes.

Implications for AFS licensees

The use of third-party lead generation services does not remove an AFS licensee’s responsibility to comply with its licensing obligations.

Licensees must maintain appropriate supervision and monitoring arrangements to ensure that lead generators operate within the scope of their permitted activities and that personal financial advice is provided only by appropriately authorised advisers.

Licensees using lead generation or referral arrangements should review their existing agreements, remuneration structures and compliance procedures to ensure that:

• The activities undertaken by lead generators are clearly defined and appropriately restricted;
• Marketing materials and communications with prospective clients are adequately monitored;
• Referral and remuneration arrangements do not create inappropriate conflicts of interest; and
• Effective supervision and record-keeping arrangements are in place.

ASIC has indicated that it will continue monitoring these arrangements and take enforcement action where serious misconduct or consumer harm is identified.

What should licensees do now?

AFS licensees that engage third-party lead generators should assess whether their current oversight arrangements are sufficient, particularly where referrals involve superannuation switching or other higher-risk financial products.

The findings reinforce the importance of maintaining effective governance arrangements and ensuring that commercial relationships with third parties do not undermine compliance with financial services obligations.

If you require assistance with AFS licensing or compliance matters, including reviewing compliance arrangements, managing regulatory obligations or responding to ASIC enquiries, please contact Chris Mee at cmee@cnmlegal.com.au or call 07 3211 4010.

This article is produced as general information in summary for clients and should not be relied upon as a substitute for detailed legal advice or as a basis for formulating business or other decisions. CNM Legal asserts copyright over the contents of this article.