In Text with JD – Ensuring advice remains central as the mortgage market evolves

Brokers regularly find themselves advocating for financial advice, encouraging clients to seek advice before making the biggest decisions of their lives. For all the chaos caused by the Iran conflict, it has reinforced this point, with advisers demonstrating the tremendous value they offer – working overtime to lock in deals or navigate product pulls and repricing to best support their clients.

There’s no question that brokers are far more than just rate finders – particularly in times of volatility.

I recently sat down with Stephanie Charman, CEO of the AMI, to discuss her first 12 months in post and what a year it has been with the Financial Conduct Authority’s (FCA’s) Mortgage Rule Review, pure protection market study and then consultations on home buying and selling reform and the affordability of homeownership – the latter of which saw Stephanie giving evidence to a Housing, Communities and Local Government committee.

By her own admission, Stephanie’s 100-day plan quickly went out of the window as the AMI had to quickly advocate for advice and the role of advisers – all against a backdrop of increasing rhetoric around artificial intelligence (AI) and non-advised journeys. A key feature of her first year has been engaging with members and responding to these consultations to ensure the broker voice is heard as the regulator and government look to shape policy.

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Market-wide changes

The Mortgage Rule Review was perhaps the biggest example of this, particularly the removal of the advice trigger – something that the AMI strongly challenged and lobbied against.

Like many, Stephanie’s view is that we do need to rebalance risk appetite. However, she is quick to caution moving too far in the other direction. Instead, it’s a case of learning from what has worked in the past, while leaving some concepts firmly in the history books.

Removing the advice trigger for me feels completely at odds with the direction of travel of the sector – particularly with increasing focus on Consumer Duty and good customer outcomes. Even for more sophisticated customers who may be fine with a non-advised route, advisers are still best placed to ensure good outcomes. It’s a view that is shared by Stephanie and AMI, questioning whether consumers really know what they’re not getting by going down a non-advised route and, importantly, what off-ramps are in place if they suddenly realise they do need proper advice.

While the opportunity is there for lenders to pivot more towards direct sales, it was encouraging to hear from Stephanie that the majority of lenders appear to remain committed to putting their efforts behind brokers.

A huge advantage of business coming through advisers is the ability to have a proper conversation around protection, and I chatted with Stephanie about the pure protection market study and its interim report, which found that for the majority of customers, protection was delivering fair value and good outcomes.

Of course, the biggest takeaway is an issue the sector is well aware of – the growing protection gap.

Stephanie is clear that helping advisers to close that gap is a priority for the AMI and looking at what work can be done to simplify the process, remove any potential bias and give customers a better understanding of the value.

Market outlook remains unclear

Looking ahead, it’s still unclear what impact the conflict will have on the market. All eyes will likely stay on inflation, as oil and commodity prices continue to feel the effects. Stephanie herself remains optimistic about future prospects and highlights the momentum and appetite we are still seeing, along with the significant number of mortgages set to mature in the coming months.

It certainly mirrors what we’re seeing on the ground at Just Mortgages, with positive numbers of buyer registrations, valuation requests and mortgage appointments.

Looking more broadly, Stephanie says there is a need to embrace technology moving forward – doing so in a consumer-led way that best suits individual firms’ client banks and business models.

Artificial intelligence (AI) has a role to play, helping brokers to be more efficient, more productive and more thorough in their quality control. Stephanie is keen to see the sector get better with data to best support clients. This is certainly an area for improvement to enable advisers to leverage good-quality data, technology and AI to augment the advice process, while keeping human advisers right at the heart of that process.

It’s great to hear that the priority for the AMI is further engagement with the regulator and trade bodies on behalf of brokers, while working with firms directly to help safeguard advice – particularly through technology adoption. In such a challenging landscape, it’s fantastic to have someone like the AMI stressing the importance of the broker. In a market defined by uncertainty and change, one thing remains clear: the value of trusted, professional advice has never been more essential.