# Pension cold-calling financial services biz cops largest ever fine from UK data watchdog

EB Associates, a London-based financial advisory business, is facing a £140,000 fine from the UK's data watchdog after it instigated 107,000 illegal cold calls to people about their pensions. The fine, the largest ever issued by the Information Commissioner's Office (ICO), follows a wider investigation into organisations …

1. #### £750 per referral, about £1 per person fine

See title.

750 x 107,000 = £80,250,000 (total for referrals)

140,000 / 107,000 = £1.31 (fine per referral)

Not every referral would result in a lead. But as long as the value of the lead was more than £1.31 to EB Associates they'd be happy.

Not bad financial sense on their part.

1. #### Re: £750 per referral, about £1 per person fine

The £750 would be the amount that EB would be paying the third parties if they provided a lead that resulted in a signup and a commission payment from whichever pension provider they got involved.

As for the conversion rate of cold calling - think 0.001% or less, hence the reason for outsourcing it to people who are paid such a high figure if they get a result.

The real cost is going to be felt by the pension providers if anyone was transferred to them without the correct advice having been given and followed.

1. This post has been deleted by its author

2. #### Re: £750 per referral, about £1 per person fine

@talk_is_cheap yes, and shockingly that maths still works out in EB's favour.

EB are basically saying the _minimum_ a converted lead is worth to them is £750. You can bet they'll be getting more than £750 in commission from pension providers, if they're prepared to pay that to acquire customers in the first place.

To be told there is an additional cost (a fine in this case) of around £1.31 on top of that £750 is a drop in the ocean. It's not exactly a disincentive for people to not bother trying the same thing.

1. #### Re: £750 per referral, about £1 per person fine

Without knowing how many of those 107,000 cold calls resulted in a converted lead the comparison is meaningless.

1. #### Re: £750 per referral, about £1 per person fine

@Ian Johnston it's not a meaningless comparison. Of course there's no way they'd get a 100% conversion rate.

But the fine is still proportional to the number of prospective customers who were contacted in an illegal way. Therefore the fine per lead (converted or otherwise) is still in the region of £1.31 per illegal correspondence.

Given the company were prepared to pay £750 to acquire any converted lead the "charge" (fine) for contacting customers in this way is disproportionately low. If the fine had been £750 per person contacted - converted *or not* - that might have sent a very different message.

We also know that if they were prepared to pay £750 for acquisition there was a lot more than that amount in it for EB in the long run. You wouldn't even need a big conversion rate before the £140k "cost" goes from red to black. The summary being - this fine is not much of a disincentive for people to try doing the same in future.

1. #### Re: £750 per referral, about £1 per person fine

But the fine is still proportional to the number of prospective customers who were contacted in an illegal way. Therefore the fine per lead (converted or otherwise) is still in the region of £1.31 per illegal correspondence.

No, sorry, it doesn't work like that. The conversion rate from "cold call" (for each one of which they paid a fine) to "converted lead" (for which they were prepared to pay £750) is absolutely essential information.

Supposing for the sake of the argument, they got precisely one converted lead. That one would have cost them £750 in fees and £140,000 in fines.

On the other hand, if all 107,000 calls resulted to converted leads, they'd have spent £80.25m in fees and the same £140,000 in fine.

To save you doing the maths, the balancing point where fees and fines both cost £750 per converted lead is 0.174%. Any higher than that and fines per converted lead are lower than fees; any less than that and fines are proportionately higher.

1. #### Re: £750 per referral, about £1 per person fine

It depends whether they are ( supposedly) penalising activities or profits.

And surely here it is the act of cold calling that is prompting the penalty, not the profit.

So a quid a pop.

2. #### Re: £750 per referral, about £1 per person fine

@Ian Johnston - you seem to be missing a key point that the only people who care about the conversion rate are EB. Nobody else, especially the regulator who has imposed the fine cares or even knows what the conversion rate was! What it amounts to then is the regulator saying - "if you choose to contact 107,000 people *illegally* it will cost you £1.31 per person you contact".

If EB were prepared to pay £750 per converted lead, we all know damn well they would have got more than £750 out of that in the long run - otherwise they wouldn't bother. The fine therefore is disproportionately low. Irrespective of the conversion rate, the "cost" (fine) of the sum of the illegal activity (contacting 107,000) people is £1.31 per offence. They have not been fined against their unknown conversion rate, clearly.

3. #### Re: £750 per referral, about £1 per person fine

This is why USA FTC actions not only have the fine, but require the company disgorge all income generated

It avoids the "do bad stuff, pay small fine, profit" cycle

2. #### Re: £750 per referral, about £1 per person fine

" Therefore the fine per lead (converted or otherwise) is still in the region of £1.31 per illegal correspondence"

And THIS underscores why the UK needs statutory per call damages as the USA TCPA instiuted from day one

\$500 per call claimable by the call recipient (tripled if wilful - meaning any rules were broken), jointly and individually payable by the calling company and the call instigator, with \$15,000 per call charges once the FCC stepped in

The idea was deliberately intended to dissuade businesses by bankrupting them (and just like the UK, you can't dodge a judgement by phoenixing) if they continued

In this case it's good EB got hit - they were banking on the calling outfit being the schmucks with the fines. It's bad that the ICO didn't name the calling outfits and their fines too

2. #### Fine

Given that the "fine" works out at around £1.31 per call, me thinks that they have used a wrong definition of fine:

Fine

You use fine to describe something that you admire and think is very good.

There is a fine view of the countryside.

This is a fine book.

These are some fine phone calls you made.

In seriousness, a fine these days just means a business cost that is non tax deductible.

1. #### Re: Fine

Absolutely. If they're paying £750 per client as a referral fee, you can get some indication of how valuable that lead is to EB Associates.

Answer: more than £1.31 per client!

The people who impose these fines don't really seem to grasp this extremely basic premise. It's a negligible "fee" for getting caught out.

1. #### Re: Fine

You are assuming that every single one of those 107,000 cold calls resulted in a converted lead. That seems unlikely.

1. #### Re: Fine

If 187 people had resulted in a lead, that would make £140,250. Anything above that is profit.

1. #### Re: Fine

187 people from 107000 calls, that's a 0.17% conversion rate from cold calls. I suspect it was less than that. 0.17% conversion rate from cold calls sounds extremely high to me, only possible if they have a pre-screened list of vulnerable people and high pressure is applied, and I don't see any evidence that was the case

1. #### Re: Fine

Everyone talking about the conversion rate is missing the point. It doesn't matter what the conversion rate was - even if it was zero. Nobody except EB cares what the conversion rate is. The real point is that the regulator who has imposed the fine has essentially said "the cost of illegally contacting 107,000 people is £1.31 per person". That sends the wrong message.

2. #### Re: Fine

> a fine these days just means a business cost that is non tax deductible

True, but they are lobbying to make it tax deductible.

3. #### in other

financial news , EB associates just went bankrupt and ceased trading......

All of EB's assets have since been sold to FC associates founded 15 minutes ago..

I wish I wasn't as cynical...

1. #### Re: in other

FC associates? Aren't they part of the GD holding group?

1. #### Re: in other

I think you'll find GD holding group are now a subsidiary of HE global.

2. #### Re: in other

They had £1m of cash in the bank as of 31st December 2020, up £421k from the previous year. I don't think a £140k fine is going to bankrupt them.

1. #### Re: in other

Have you never seen an instant bankruptcy? With the right accountat you can go from solvent to bankrupt in three clicks…

3. #### Re: in other

@Boris - was going to post something similar.....

4. #### Re: in other

Which is why fines such as these should be directly applied to the person, or persons, that is the owner of the company. Otherwise they'll just have creamed off the illegally gotten money and can just apply the fine to a disposable organisation.

1. #### Re: in other

Limited liability only protects shareholders

Directors are liable for their actions and company fines. They CAN be gone after if ther company doesn't have the money

4. "[FCA] opened 24 per cent more cases (135) in 2020 versus the prior year"

Wow, a whole 135! All this on a budget of only £632.6m (2019-20)...

All the leaks, all the hacks, and £140,000 is the single largest fine the ICO have given? What the hell are they up to? How can that even be true?

and when do they charge the maximum fine then?

6. Wouldn't something in the same order as RHEIR financials make more sense? Say £750 per call.

7. #### innovation

Since the only thing business understands is money, just let the ICO keep all the fines they levy. That would turn things around in a hurry.

8. #### Wow

Next up from the ICO, a strongly worded letter.

That'll really scare folk.

/s

9. #### Misunderstanding the role of the ICO

There appears to be a misunderstanding about what the ICO is here for.

It is NOT a wild west sheriff, ruthlessly gunning down rustlers, outlaws, and generic black-bandana wearers, to create a world safe for shopkeepers and school-marms.

Its role is more along the lines of a bus conductor, asking customers to show their tickets and not put their feet on the seats, in order to fit more people onto the the bus.

One of their fundamental beliefs, would be that business is to be encouraged, so punishing companies is going to be done reluctantly.

1. #### Re: There appears to be a misunderstanding about what the ICO is here for.

there appears to be a misunderstanding that there is an effective enforcement tool available. Instead, there is a wide public mistunderstanding that ICO is such a tool.

p.s. how long have we been having this 'discussion' about toothless ICO? I'm pretty sure for 15 - 20 years, at least. The result? Next to nil. Keep discussing...

1. #### Re: There appears to be a misunderstanding about what the ICO is here for.

It's worse than that

The ICO and Ofcom are deliberately nobbled and rights of private action curtailed specifically to allow businesses to keep misbehaving

The best laws money can buy. Ones that appear to follow EU directives but when you scratch the surface are administered in wasy impossible to actually achieve the desired result

Now we're out of the EU you can expect the mandacity of this behaviour to become more open and brazen. There's no longer a EU supervisor to have to show the (cooked) books to

Limited and specific exemptions, eh what?

2. #### Re: Misunderstanding the role of the ICO

OK, so who is the sheriff then?

Surely, not one of those tumbleweeds that keep rolling through Regulation City?

10. I'm confused. I thought BA attracted the ICOs highest ever fine (£20 million)

https://www.digit.fyi/data-protection-2020-the-biggest-fines-ever-issued-by-the-ico/

1. 1: They only ended up payting about £1million

2: This is the biggest ever fine for cold calling

Sooner or later some of these companies are going to hit people sociopathic enough to hunt them down and kill the people responsible. I hesitate to think how laws will change after that but in all liklihood it will be to protect the cald calling outfits rather than people FROM the cold callers

11. This is not working, and the amount of the fine is not really the problem.

The problem is that cold-calling without informed consent needs to be a penal offense, not a civil one.

Forgive me if I'm not using the exact terminology as English is not my first language, but the concept is - when this happens, the penalty should hit the actual people who are responsible for making the decisions that led to the illegal calls being made, and not (well, not only) the company that made them. Just like e.g. fraud.

If all you're risking is company liability, then if your primary business is scam calls, you'll just fold the company and restart with another; if your primary business is legit insurance, then any fine large enough to hurt would also needlessly damage your legitimate business, causing outsized problems to all your customers.

Nope, what's really needed is to find the person who gave the directive to disregard informed consent, and punish him/her personally.

1. You're misunderstanding what limited liablity means

Under company law, directors CAN and ARE held responsible for their actions and decisions as directors. They can be held responsible for the fines

It's the shareholders whose liability is limited, but if they are also directors then the corporate veil is essentially pierced in most cases

12. #### Failed cronyism

Serves them right for not giving Boris the Liar a big enough bung

1. #### Re: Failed cronyism

@Dr Fidget

Oh just fuck off with your fucking politics

13. #### largest ever fine

sarcasm or clickbait?

14. #### No word from the FCA

On whether they will also be fining the company for breaking the law on cold calling?

15. EB tricks just 14 of those 107,000 people into handing £10,000 of their pensions/savings and thats covered the fine.

Everything ese is pure profit straight into the EB executives pockets. The fine should be 100x as much, it should pierce the corporate veil (go after the CEO and executives houses and personal wealth) and if EB execs are found to have smuggled the money abroad and it can't be recovered, they should rot in prison for 10 years for each person they tricked.

1. #### pierce the corporate veil

"pierce the corporate veil (go after the CEO and executives houses and personal wealth)"

Something along those lines seems to be how the animal rights activists got the law changed a few years back.

How long before other streams of civil disobedience catch on?

16. In other news, EB Associates has entered administration, all of its assets have been bought for £1 by the totally unrelated EB Partners, coincidentally running from the same premises and the same directors.

17. #### There is another penalty

called "Commission clawback". I used to be a mortgage underwriter at Bradford and Bingley. (could I lift the lid on why that company closed or what?). You can be absolutely certain that this "clawback" will be happening big time. That 750 quid per refferal will be toast.

1. #### Re: There is another penalty

Ah yes, that's fun.

Someone I know was from school as always a tad dodgy became a life insurance/investment salesman - after working for the company for a couple of years he had a _very_ good run of sales - sold several hundred policies over a 6 month period and collected commission on them

Except the people being insured didn't exist or had no idea there were policies, only the first few payments were ever made and the account used to handle the commission payment was cashed out with no trail

He disappeared. that was 35 years ago and only rumours have ever surfaced of his whereabouts ever since.

All for a measely \$280k

18. If the top is £500,000 why did they fine them less that half of that? This ia just a slap of the wrist and doesn't cover similar scams done online at all.

19. #### £140,000...

...is loose change to these sharks. Just another business expense. The only way to make these fines effective is to personally fine the person, or persons responsible and accountable for the activity.

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