Referral fees for IT consultants: what the rules actually say

Software vendors, MSPs and hosting providers pay referral commissions as routine — 10% to 20% of first-year contract value is a normal band, and some run recurring. No UK statute prohibits an IT consultant taking that money. The pressure comes from two quieter directions. Contract first: master services agreements with larger clients frequently contain conflict-of-interest or anti-inducement clauses, and an undisclosed vendor commission can put you in breach of the very contract paying your day rate. Bribery Act second: a disclosed commission is lawful; a concealed payment intended to sway your 'independent' recommendation risks being characterised as something far worse, with penalties up to ten years' imprisonment at the extreme. The fix costs one sentence: 'We receive commission from this vendor; here is roughly what it is.' Clients almost never mind. They mind finding out later.

IT consultants get unusual visibility into a business's trajectory — the founder preparing to sell, the director suddenly earning properly, the company with cash it doesn't know what to do with. Those moments invite referrals to financial advisers, and being paid for the introduction is lawful. The boundary is the FCA perimeter: making introductions is fine; advising is regulated activity, and performing it without authorisation is a criminal offence under the Financial Services and Markets Act 2000. Concretely — 'I know an authorised adviser worth meeting' is safe. 'Stick the sale proceeds in an ISA first' is not, even said casually over a server rack. The habit that keeps you safe is refusing to hold opinions out loud about financial products, while cheerfully holding opinions about everything else. Consultants are usually good at that.

Passing a client contact's details to a referral partner is a UK GDPR disclosure, and it needs a lawful basis. The clean route takes half a minute: tell the person, get a yes, make the introduction, note the date. Never hand over lists, and never share anything beyond name, role and context — the referral partner does not need the client's infrastructure documentation to say hello. On the money side, put referral arrangements in writing even between friendly firms: what triggers payment (introduction, signed contract, or first invoice paid — these are very different events), the percentage or figure, and when it expires. A one-page agreement prevents the classic dispute where a 2024 introduction closes in 2026 and both parties remember the deal differently. Undocumented referral fees have ended more partnerships than they have funded.