Dishonest and devious LEI code providers

Dishonest and devious LEI code providers

We have previously covered in an article why it’s not a good idea to buy the cheapest LEI code you can find, and how a good LEI provider can save you both time and trouble.

But what happens if you fall into the clutches of a dishonest provider, and how do you get yourself out of trouble? We will explore the topic in this article and try to answer any questions you may have.

What characterizes a dishonest LEI provider?

It’s important to note that there are lots of good, reputable LEI code providers out there. They take pride in providing their customers with a secure platform for managing their LEI codes and wouldn't dream of reselling their customers' information.

Unfortunately, there are also providers for whom it is simply a matter of getting as many LEI codes under administration as possible. There are several reasons why certain LEI providers try to boost their customer numbers: maybe they’ve been operating at a loss for several years and need to boost the number of customers before being able to sell their company to a competitor. Or maybe they make money by selling their customers' information to an unknown third party.

How does a dishonest LEI provider go about amassing customers? Here are some of the ways they do it:

• They claim to be something they’re not, e.g., in terms of size or country of origin. (For instance, passing themselves off as Danish or British when they’re not.)
• They acquire competitors' customers by spreading falsehood about their competitors and soliciting their competitors' customers directly in an attempt to get them to switch providers. These solicitations can happen via email or physical postcards and contain misleading or blatantly false information that confuses or worries the recipient.
• They dump their prices and offer the cheapest LEI codes on the market.

What's the problem with a cheap or free LEI code?

All LEI code providers have to buy their LEI codes from an LOU, an issuing organization certified by GLEIF. This means that it’s not possible for a provider to sell an LEI code below the market price without losing money. It is also not possible to distribute free LEI codes.

Apart from paying for the LEI codes themselves, a provider also has to develop and maintain an online platform for its customers. Ideally, a provider should also have a customer service team ready by the phones. These things all cost money, and the LEI provider has to make enough to cover these costs. This is why it is not possible to offer (very) cheap or free LEI codes.

If an LEI provider offers cheap or free LEI codes, it’s a clear indication that they will do anything to attract you as a customer - and it’s likely to result in one of the following scenarios:

• The price of your LEI code may suddenly increase drastically without warning.
• Your information may be sold to an unknown third party.
• The provider tries to amass as many customers as possible to attract someone to buy their business.

What happens if you end up with a dishonest LEI provider?

We regularly hear about the following experiences from customers who bought the cheapest LEI code they could find:

• They suddenly start getting a lot of spam mail.
• Their company data is not being registered correctly.
• The LEI code expires without the customer being notified.
• Their company data is not updated.

It can have serious consequences for a business owner if his or her LEI code is not registered correctly or expires. This may mean that the bank or asset manager suspends any trading activities.

How do you spot a dishonest LEI provider?

We have said it before: if an LEI code is for sale at a price significantly below market price, it's a red flag. The same goes for free LEI codes.

There can be several reasons why an LEI provider chooses to dump the prices of its LEI codes or starts giving them out for free (you can read more about it in the chapter below, ‘How to quality-check an LEI provider’), and none of these reasons benefit you as a consumer.

The old saying, ‘If something’s too good to be true, it probably isn’t,’ applies to the LEI world also. So be wary of (very) low prices and free LEI codes.

How to quality-check an LEI provider?

There are some basic things you should check before choosing an LEI provider. If the provider's website is poorly written, it is usually the first indication that the provider is not who they make themselves out to be.

You may also want to ask yourself the following questions:

• Does the price of my LEI code include all fees and charges to GLEIF?
• Does the provider know about company structure and legislation in my jurisdiction?
• Will I save time and trouble by purchasing my LEI code from this provider?
• What do I get for the money? (If English-speaking customer service is a priority, then you must choose accordingly).
• Does my provider have a profitable and stable business (how long has the company been around and is it a viable business )?

You may think that it sounds like a lot of time spent checking an LEI code provider, seeing that an LEI code is merely a formal requirement that doesn’t cost a lot of money to acquire.

Yes, but please keep in mind that your company will need an LEI code for many years to come - and that by choosing the right provider, you can avoid thinking about it in the future. Imagine if you can rest assured that your LEI code is both updated and renewed for years to come. If you look at it that way, there is both time and money to be saved by choosing a trustworthy and dependable LEI provider.

How do I escape a dishonest LEI provider?

If you find yourself in the clutches of a dishonest LEI provider, do not despair. You can escape your current LEI provider by requesting a transfer of your LEI code to a different provider.

If you want to move your LEI code to our platform, just contact us, and we will handle all the practicalities. This includes contacting your current provider. We will also ensure that your company information is registered correctly, so you don’t have to worry about disruptions or sanctions from your bank or investment firm. You keep your current validity period for up to 1 year, and if your LEI code has expired or is close to expiration, we will renew it for you.

Click here to move your LEI code to our platform or contact our customer service to find out more.

In summary

It is well worth it to spend a bit of time finding the right LEI provider. Once you have, you can sit back knowing that your LEI code is always valid and up to date. It saves you time and trouble - and ultimately money.

However, if the damage has been done, e.g., if you find yourself being bombarded with emails from an unknown third party - or if you’re suddenly told by your bank that your LEI code is not valid - then find yourself an LEI provider with a good reputation and ask them for help.

Please contact us here, if you have any questions at all.