Article
It's Time to Dispel the AI Myths
At the heart of the mortgage industry's technological transformation lies a critical misunderstanding: the fear that AI will replace human interaction.
The FCA's latest "Dear CEO" letter (Jan 25) underscores the need for tailored advice and robust affordability checks as rising rates put more pressure on borrowers.
The FCA's “Dear CEO” letter last week to mortgage intermediaries serves as a timely reminder of our responsibilities in ensuring good customer outcomes. The FCA emphasises the increased interest rate environment has created new challenges, with many borrowers facing higher payments and potential difficulties in passing affordability assessments.
What stands out in the FCA's communication is the clear expectation that intermediaries must not only check whether customers meet basic lending criteria, but under the Consumer Duty, are required to ensure their entire advice process is designed around customer needs, characteristics, and financial objectives.
Affordability assessments serve multiple crucial purposes:
1. They help identify customers facing challenging financial circumstances or vulnerability, enabling brokers to adapt their approach and provide more tailored advice.
2. They allow brokers to probe beyond stated preferences and explore any contradictions in customer needs - a key requirement highlighted in the FCA's letter.
3. They provide documentary evidence that we've taken reasonable steps to ensure good customer outcomes, helping demonstrate Consumer Duty compliance.
4. Most importantly, they protect customers from taking on unsustainable debt while protecting our businesses from future regulatory scrutiny.
Technology can help streamline these processes while improving accuracy and consistency. For instance, Sikoia's platform automates extracting payslips and bank statements and generates comprehensive affordability assessments and flags potentially vulnerable customers. This systematic approach saves brokers and lenders 30 minutes or more, and help ensure they meeting their Consumer Duty obligations efficiently and effectively.
Having robust affordability checking systems in place isn't just about compliance - it's about building sustainable businesses that truly serve customer needs. More and more brokers, banks and origination platforms are integrating Sikoia’s tools and technologies to support their affordability assessments and income checks.
Book a casual intro call to learn more here.
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[The FCA's “Dear CEO” letter to mortgage intermediaries is available here: https://www.fca.org.uk/publication/correspondence/fca-strategy-mortgage-intermediaries.pdf]
About Sikoia
Sikoia is a London-based fintech which helps financial services providers automate key parts of their customer verification processes. Sikoia offers centralised access to organised customer data typically required at onboarding and generates automated insights. Its solutions are built for seamless integration into existing systems via API, or for direct use through its straightforward, ready-to-use Customer Evaluation Dashboard.
Sikoia serves fintechs and large financial services providers in more than three countries, is regulated by the Financial Conduct Authority (FCA) as an Account Information Service Provider (AISP) and credit reference provider and is backed by leading institutional investors.
Sikoia Ltd is authorized and regulated by the Financial Conduct Authority (FCA) as an Account Information Service Provider (AISP) under the Payment Services Regulations 2017 (FRN: 942979) and as a credit reference provider (FRN: 942616). Sikoia Ltd is a credit broker and not a lender. Credit is subject to status.
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