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 7.5% drop in broker sales, the FCA estimated.
Mortgage advisers currently account for nine in 10 mortgage sales, according to data from the Intermediary Mortgage Lenders Association.
Rob Jupp, group chief executive officer of the Brightstar Group, said the big banks are “getting ready to wage war” by investing millions in AI to claw back market share.
He said: “Now branches don’t really exist anymore, it’s 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.
“They 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.”
Tanya Elmaz, director of intermediary sales for specialist lender Together, warned that brokers need to “understand the headwind that’s coming” and “adapt”.
She said: “When 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.
“People 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.
“Younger 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.”
John Davison, head of product, proposition & distribution at lender Perenna, said that the days of “order taking” were numbered, particularly in relation to product transfers, where a mortgage holder switches to another product with the same lender.
He said: “We’ve 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’ve made the right choice.
“While 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.
“I’m 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.
“The true value of advice for a customer comes from understanding how the recommended product will support and enhance their plans – not just deliver the cheapest monthly payment.”
Davidson added: “Technology 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.
“Brokers 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.
“The danger here is that customers accept the new, quick and easy process from their lender without receiving any advice – and this is where brokers have an opportunity to ensure they remain relevant in a world of digital automation.”