Artificial intelligence and regulatory changes mean borrowers could be driven away from the intermediary channel, multiple broker firms have warned.<\/p>\n
Regulator the Financial Conduct Authority (FCA) is consulting on rules that would help mortgage customers go direct to mortgage lenders by removing the need to always get advice.<\/p>\n
Such a move would result in a 7.5% drop in broker sales, the FCA estimated.<\/p>\n
Mortgage advisers currently account for nine in 10 mortgage sales, according to data from the Intermediary Mortgage Lenders Association.<\/p>\n
Rob Jupp, group chief executive officer of the Brightstar Group,\u00a0said the big banks are \u201cgetting ready to wage war\u201d by investing millions in AI to claw back market share.<\/p>\n
He said: \u201cNow branches don\u2019t really exist anymore, it\u2019s made the whole virtual marketplace acceptable to customers, which is where AI can play a huge role. I do worry that some brokers make assumptions that every year enough deals will fall into their lap.<\/p>\n
\u201cThey will need to offer real value to people for their commission and to change their proposition because AI will be better at taking on the simple tasks of securing people a good deal.\u201d<\/p>\n
Tanya Elmaz, director of intermediary sales for specialist lender Together,\u00a0warned that brokers need to \u201cunderstand the headwind that\u2019s coming\u201d and \u201cadapt\u201d.<\/p>\n
She said: \u201cWhen I go to a mortgage advisor now, I want advice on retirement and my will and everything else, I want more than just a broker picking up the phone and saying my current deal is coming to an end.<\/p>\n
\u201cPeople are also not necessarily just looking for the fixed rate, but in a more sophisticated space they are looking at variables, trackers and different types of mortgages.<\/p>\n<\/p>\n
\u201cYounger people are also far more used to doing everything on their phone or on an app in just a few clicks, so brokers will have to watch their back with technology and adapt to supporting customers in different ways.\u201d<\/p>\n
John Davison, head of product, proposition & distribution at lender Perenna, said that the days of \u201corder taking\u201d were numbered, particularly in relation to product transfers, where a mortgage holder switches to another product with the same lender.<\/p>\n
He said: \u201cWe\u2019ve seen some brokerage firms come to the market in the last few years where their advice process is not much more than order taking. The customer picks a product themselves online, and then the advisor affirms they\u2019ve made the right choice.<\/p>\n
\u201cWhile advice may be offered, unless advisors fully assess customer needs, circumstances, and future plans, it can be easy to recommend a product that may not be suitable in the longer term because the customer is focused on cost rather than risk.<\/p>\n
\u201cI\u2019m an advocate of customer choice and education, and whilst it is important to show customers what rates are available, the conversation should start with what they want, what their plans are, what their needs are, and what their circumstances are in order for an advisor to make a holistic recommendation.<\/p>\n
\u201cThe true value of advice for a customer comes from understanding how the recommended product will support and enhance their plans \u2013 not just deliver the cheapest monthly payment.\u201d<\/p>\n
Davidson added: \u201cTechnology and AI is catching up quickly in the product transfer process, where lenders are now able to reach out to customers directly, offer them a near instant process for accepting a rate available, and all without advice.<\/p>\n
\u201cBrokers will be left behind in this part of the market unless they are able to offer their customers more value than just a new product.<\/p>\n
\u201cThe danger here is that customers accept the new, quick and easy process from their lender without receiving any advice \u2013 and this is where brokers have an opportunity to ensure they remain relevant in a world of digital automation.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Artificial intelligence and regulatory changes mean borrowers could be driven away from the intermediary channel, multiple broker firms have warned. Regulator the Financial Conduct Authority (FCA) is consulting on rules that would help mortgage customers go direct to mortgage lenders by removing the need to always get advice. Such a move would result in a […]<\/p>\n","protected":false},"author":1,"featured_media":435,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-434","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-second-home"],"yoast_head":"\n