IG Group has enhanced its refer-a-friend promotion and is now offering a £50 reward to customers who introduce friends to their stocks and share ISA accounts. ISA accounts allow savers to invest up to £20,000 per annum in a government-approved tax-free wrapper. The 2023 ISA deadline is the end of the tax year, 5th April
IG ISA refer a friend – how it works
To claim the £50.00 reward, Individual IG clients, who have had an account with the firm for at least three months, and are residents in the UK, will need to login to their My IG platform, click on the settings tab and select refer-a-friend, from the menu options.
And then invite their friends to open an account by sharing a unique referral link.
Is there a limit to the number of friends you can refer?
Qualifying IG clients can invite as many friends as they choose, and they will receive the £50.00 reward for up to five referrals, who open an IG account and place at least one trade on it, within three months of being referred.
Introducers can expect to receive their reward within 30 days of a successful referral being registered.
Clients must have a personal or business relationship with their referrals and they cannot refer themselves. Nor can they refer accounts or individuals for which they hold a power of attorney.
Why do brokers offer refer-a-friend schemes?
The answer to this is two-fold.
Firstly there is no better recommendation of your service than by word of mouth from your existing customers to their own network of friends and family.
And by rewarding clients who refer members of their network, the broker is saying thank you to them.
The second and more pertinent reason for offering a refer-a-friend scheme is that they are a cheap way of generating new leads and account openings.
The cost of acquiring a new CFD client for a margin trading broker is around $1500, or £1220, a pop, most of which is spent on marketing and advertising.
Against that background running a refer-a-friend promotion through emails to, and in-house banner ads or landing pages, directed at, existing clients, is a very cost-effective way of drumming up a new business, even allowing for the cost of rewarding the referrers.
Do other brokers offer refer-a-friend schemes?
We reported in August last year that the FCA was set to clamp down on promotions such as refer-a-friend schemes, as part of a move to tighten up the financial promotion and suitability rules around high-risk investments. Indeed the FCA’s own website carries a press release from August 2022 that includes this comment:
“Firms also need to use clearer and more prominent risk warnings and certain incentives to invest, such as ‘refer a friend bonuses, are now banned”
So it’s somewhat surprising to see that refer-a-friend schemes are still being actively promoted by FCA regulated brokers.
However, on further inspection, many of these refer-a-friend promotions have either been withdrawn or are being offered by overseas divisions of these firms, which are regulated locally and not the FCA.
IG Group and Spreadex seem to be the exception to the rule, indeed Spreadex is offering clients the opportunity to earn up to £3o00 through its refer-a-friend scheme. Though to earn the full amount you have to refer/introduce five friends, who, open an account, deposit into and trade on that account, and then opt up to professional status, which seems like a pretty high hurdle to us.
What this highlights is another grey area in regulation, because UK clients shouldn’t really be seeing promotions and adverts from offshore brokers and yet they are, not to mention the apparent contradiction between last August’s FCA press release, on refer-a-friend offers and the IG and Spreadex promotions in the UK.