A recent judgment shows that the way in which referral and lead-generation arrangements are structured – particularly how they are remunerated – can determine whether the arrangement falls within regulated “intermediary services” under the Financial Advisory and Intermediary Services Act.
In a decision delivered on 14 April 2026, the High Court in Johannesburg held that the Lead Referral Agreement relied on by the plaintiff was, in substance, an intermediary services arrangement: the plaintiff was paid not for a simple introduction, but on a commission-style basis tied to successful policy outcomes and ongoing premium flows. On that basis, the agreement was found to be illegal and unenforceable, because the plaintiff was neither an authorised financial services provider nor a representative appointed under FAIS.
Although the agreement contained wording indicating that the plaintiff would act as a “marketing agent and lead referrer only” for purposes of effecting an introduction, the Court examined the operative terms – particularly the remuneration model and provisions linking the referral activity to the conclusion of policies – and concluded they satisfied the statutory causation element embedded in the FAIS definition of intermediary services.
The plaintiff, The Raspberry Academy (Pty) Ltd, sued Oaksure Financial Services (Pty) Ltd for R1 214 698.62 said to be outstanding referral commissions under a 2019 Lead Referral Agreement. It also sought ancillary relief aimed at obtaining documents and an accounting.
Oaksure did not defend the action. Raspberry Academy accordingly applied for default judgment. But when the matter came before the Court, Acting Judge DJ Smit raised concerns about the legality and enforceability of the contract and requested further submissions on that issue before ruling.
Did the agreement, in substance, involve ‘intermediary services’?
The Court approached the dispute by analysing the operative terms of the Lead Referral Agreement. In essence, Raspberry Academy undertook to refer potential customers (“leads”) to Oaksure to market Oaksure’s short-term insurance products to those leads. Oaksure, in turn, would pay a referral fee calculated as a percentage of the revenue derived from leads who concluded policies after referral.
Two aspects of the agreement featured in the Court’s characterisation enquiry.
First, remuneration was structured around policy outcomes and premium flows. Clause 7 linked payment to successful policy outcomes and premium flows: the referral fee was calculated as a percentage of “net premium” in respect of active and paid-up “net policies”, became due only once corresponding premiums were received by Oaksure, and remained payable for as long as the relevant policies stayed in force, notwithstanding termination of the agreement. Annexure C further set the percentages, including a 10% share of net premium for passenger liability insurance and a 50% share of statutory commissions for other lines.
The second aspect was the agreement’s own causation language. “Referral” was defined as action by, or under the control of, Raspberry Academy that “directly results” in a person contacting Oaksure for the specific purpose of obtaining a quotation or sale in respect of a policy with a view to concluding that policy. In addition, Raspberry undertook to generate leads, obtain consent for referral of customer information, and inform potential customers that Oaksure would contact them and discuss “appropriate cover”.
Against that background, the Court formulated the statutory question under FAIS: whether the lead referral and marketing services constituted an “intermediary service” – that is, an act (other than advice) performed for or on behalf of a client or product supplier, the result of which is that a client may enter, offers to enter, or enters a transaction in respect of a financial product with a product supplier. The judgment shows that the definition turns on a required causal link between the act performed and the potential or actual transaction.
The Court treated the remuneration basis as the clearest indicator that the agreement contemplated intermediary services. Raspberry Academy was not remunerated on a flat-fee basis per lead (which might have suggested a mechanical activity limited to transmitting contact details). Instead, it was paid only where a lead actually entered an insurance transaction – and then continued to receive percentage-based payments linked to premiums actually paid, for as long as the policy remained in force.
In the Court’s assessment, this aligned the compensated activity closely with the statutory causation element: Raspberry’s paid role was not simply to refer leads but to effect introductions and marketing that directly resulted in insurance transactions.
The Court observed that if Raspberry had merely supplied contact details, there could have been a factual debate about how the details were obtained and communicated, and whether that conduct necessarily met even the broader FAIS threshold – particularly if remuneration had been a flat fee per lead rather than a success-based share of premium flows.
However, the agreement before the Court was structured in a way that compensated only those referrals that culminated in policies and premium flows. It concluded that Raspberry Academy was rendering a financial service in the form of an intermediary service.
Intermediary service characterisation rendered the agreement unlawful
Once the Court concluded that the agreement contemplated intermediary services, it moved to legality.
A person may act as an FSP only if authorised and may act as a representative only if duly appointed. On the facts before the Court, Raspberry Academy was neither an authorised FSP nor a representative of Oaksure. The result, in the Court’s reasoning, was that the agreement contemplated regulated activity being performed without the required status, rendering the arrangement unlawful.
The judgment stated that, in the context of statutory regulation of intermediary services, courts have consistently held that agreements contravening the relevant statutes are unenforceable due to illegality.
Smit AJ also noted that the Short-term Insurance Act may apply to the relationship insofar as it prohibits rendering “services as intermediary” in relation to a short-term policy without the approval of the Financial Sector Conduct Authority, with the regulations defining those services (in relevant part) as acts the result of which another person will or does or offers to enter into, vary or renew a policy.
He observed that the Short-term Insurance Act formulation is more emphatic on causation, in that it requires the act to result in an offer (or other policy transaction), whereas the FAIS definition is more capacious because it extends to conduct where the result is that a client may enter a transaction.
The Court also dealt with the agreement’s attempt to characterise Raspberry Academy’s role as unregulated. Clause 9.5 recorded that Raspberry would not perform intermediary functions, and the intention was that it would act as a “marketing agent and lead referrer only” for purposes of effecting an introduction between a lead and Oaksure.
The Court held that this statement of intention could not prevail where it was contradicted by the agreement’s operative design – particularly the commission-style remuneration tied to successful policy conclusion and continuing premium flows.
Procedural obstacle
Distinct from the illegality finding, the Court recorded an additional procedural obstacle. Raspberry Academy sought not only a monetary award, but also ancillary relief aimed at obtaining documents, an accounting and statement, and debatement.
The court noted that Rule 31(5)(a) permits default judgment only on “a debt or liquidated amount”, and the ancillary relief sought was not a claim for a debt or a liquidated amount within that mechanism.
The Court dismissed the default judgment application and made no order as to costs.
Practical implications
The judgment’s value lies in its emphasis on how an arrangement operates, not how it is described. The Court placed weight on the commission-like remuneration model –percentage of net premium, payable only on premium receipt, continuing for the life of the policy – and on contractual language and obligations that tied the referrer’s conduct to the conclusion of insurance transactions.
At the same time, the judgment is careful not to convert that analysis into a blanket rule that “all lead generation is regulated intermediation”. By noting that a purely mechanical, flat-fee contact-passing arrangement might prompt a different factual enquiry, the Court recognised that the classification of lead activities can be context-dependent. The dividing line, on the Court’s analysis, is less about whether a third party is involved at all, and more about whether the third party’s compensated acts are structured and defined in a way that causally drives policy conclusion and premium flows.
Disclaimer: This article is general information and not legal advice. Whether a particular referral or marketing arrangement constitutes intermediary services is fact-specific and should be assessed with appropriate legal and compliance input.
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