The pitfalls of Introducer Agreements

• Blurry lines between “Introducer” and “Agent”

  Introducers are meant to introduce only. But when they start doing more—negotiating terms, chasing payments, or giving advice—they may stray into the realm of being an agent of your business. That creates liability risk. You could find yourself contractually (and legally) responsible for their actions, including any misrepresentations or compliance breaches

  Tip: Keep it clear. Define explicitly what the introducer can and cannot do in the agreement and set out clearly exactly what constitutes an introduction – is this when contact details are passed on, when an agreement has been signed or when products and/or services are supplied?

  

• Data Protection tripwires

  Introducers often pass personal data to you – names, emails, sometimes financial information. But have you thought about GDPR? If you’re receiving personal data from third parties, you need to know how it was collected and whether it was lawfully shared with you

  Tip: Include a warranty that the introducer has obtained any necessary consents or otherwise has a lawful basis for sharing the data.

  To read our excellent article on 10 Golden rules on Data Protection see here

• Payment disputes

  Commission or referral fees are usually calculated on “successful introductions”—but what does that mean in practice? Is it when the deal is signed? Or when payment is made? What if the client cancels or defaults?

  Tip: Be explicit about when fees become payable, how long the introducer is “entitled” to commission after the introduction, what happens if the client becomes a repeat customer or purchases other products and/or services and whether the introducer is entitled to tail commission – for how long and whether this ceases after termination or expiry of the agreement with the introducer

• Regulatory overreach

  In regulated sectors—particularly financial services, insurance, and credit services—introducer agreements can carry serious regulatory consequences. An unregulated introducer crossing the line can result in your business breaching FCA or SRA rules.

  Tip: Know your sector. If you operate in a regulated space, make sure the introducer’s role is compliant—and take legal advice if in doubt

• No written agreement (Yes, really)

  You’d be surprised how many introducer relationships start with a friendly conversation and end in a misunderstanding. No contract, no paper trail—just a handshake and crossed fingers.

  You are likely to be sharing confidential business information with the introducer so ensure you have confidentiality obligations and IP protection in your agreement. Do you want to include protections around not soliciting your clients after they have been introduced? Do you need to restrict the introducer from working with your competitors for the duration of the agreement? Is this an exclusive arrangement?

  Tip: Even a short, plain-English agreement can save you headaches later. If you’re paying someone for introductions, look to get it in writing

  To read more about IP and Confidentiality – you can read our articles on “IP 101 – Protecting Your Ideas” here and “What you need to know about Confidentiality” here

Final thoughts

Introducer agreements can be valuable tools for business growth—but they’re not without risk. A well-drafted agreement can protect both parties, ensure compliance, and avoid messy disputes down the line

If you’re thinking about using introducers—or you’ve already got some in place— ensure your business is protected by having a robust introducer agreement. Feel free to get in touch if you’d like some help