AI won’t kill the mortgage adviser – it may make your role more important than ever – Singh
Every few months, a new piece appears questioning whether technology will finally make the mortgage adviser obsolete.
Most recently, The Financial Times asked whether artificial intelligence (AI) could signal the end of the mortgage broker, reflecting a wider debate about how consumers will access financial products in the future. Or, indeed, how they are shifting to access them right now.
It is an interesting question, but when you look at the reality of the mortgage market, and particularly the direction of travel being set by the regulator, the answer could be different. In fact, if you read the Financial Conduct Authority’s (FCA’s) latest Mortgage Rule Review consultation paper, you could easily conclude the exact opposite.
The FCA is rightly focused on improving access to mortgage finance for groups of borrowers who may have been under-served in the past. It talks about flexibility, proportionality and reducing unnecessary barriers, but what is striking throughout the paper is what seems like an underlying assumption that somebody is going to help these borrowers understand what opportunities may now be available to them. That ‘somebody’ is unlikely to be AI. More often than not, it will be a mortgage adviser.
The people the FCA is seeking to help are who I would describe as those who do not know what they do not know. They may have been declined for a mortgage years ago. They may have assumed their income type rules them out. They may have experienced credit issues in the past. They may believe their age prevents them from borrowing. They may simply have concluded that homeownership is now not an option for them.
How exactly does an AI tool identify and engage those consumers if they never start the conversation in the first place? The reality is that many under-served borrowers only find out the market has changed when they engage with an adviser who understands both their circumstances and the options available to them.
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Consumer Duty has strengthened the adviser proposition
One of the more interesting aspects of the FCA consultation is how heavily it leans on Consumer Duty principles. The regulator may not explicitly say advisers are central to achieving good customer outcomes, but much of what it expects firms to deliver relies on understanding customer circumstances, identifying needs and wants, assessing suitability and demonstrating positive outcomes. Those are all areas where advisers add significant value.
This is why I have always felt Consumer Duty strengthens the adviser proposition rather than weakens it. The mortgage market is already overwhelmingly intermediary-driven, with around 90% of lending completed through advisers. That tells us something important. Most consumers recognise a mortgage is a significant financial commitment and want professional support when making decisions.
The consultation paper reinforces that point because many of the changes being proposed will only deliver better outcomes if borrowers understand they exist. Information on its own rarely changes behaviour. Advice often does.
AI will support advisers rather than replace them
That is not to say AI has no role to play. There are numerous areas where AI can improve efficiency, reduce administration and help advisers spend more time with clients rather than dealing with paperwork and processes. Those gains should be welcomed because they allow advisers to focus on the areas where human judgement matters most.
What AI cannot replicate is trust, accountability and professional responsibility. Consumers using AI to research mortgage options may gain useful information, but information is not the same as advice and/or a recommendation.
Equally important are the protections involved. When a consumer receives regulated advice, there is accountability behind that recommendation. There are established routes for redress if things go wrong via the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS). There is a framework designed to protect consumers and deliver fair outcomes. An AI platform cannot replace that.
The opportunity is bigger than the mortgage itself
Perhaps the biggest lesson for advisers is how the conversation should never begin and end with the mortgage. As the market opens up to more under-served borrowers, advisers have an opportunity to demonstrate the full value they provide across the entire home buying and homeownership process. Protection, general insurance, conveyancing and legal services are all vital parts of the consumer need, and all contribute towards achieving the outcome the client is actually seeking.
Consumers do not wake up wanting a mortgage. They want a home. They want financial security. They want confidence that every part of the process is being handled properly. The advisers who will continue to thrive in the years ahead will be those who position themselves at the centre of that journey and ensure no customer need goes unaddressed, whether they meet it directly or through trusted referral partners.
AI will undoubtedly change aspects of our market, just as previous technological advances have done. However, if the FCA’s latest consultation paper tells us anything, it is that helping more people access mortgage finance will require greater understanding, more guidance and better support across multiple product and service sets. Those are precisely the areas where advisers should focus on, market to consumers and continue to prove their worth every single day.
