'AI won't help borrowers who fall through the cracks'

The Certificate in Mortgage Advice and Practice (Cemap) qualification hit the news recently after an artificial-intelligence-driven computer managed to pass the test to become a qualified adviser.

But the founders of mortgage brokerage Yellow Brick Mortgages are not impressed by this, saying the qualification did little more than test technical knowledge and was devoid of any practical skills needed to succeed as a broker.

Relying on this alone did nothing to ensure the future success of a brokerage or the profession as a whole.

Perkins says: "The Cemap qualification is not fit for purpose... It doesn't teach you how to be a mortgage broker any shape or way.

"Most of it is about the legal framework or pensions or stuff that's got absolutely nothing to do with what makes a great broker, which is the communication, the research, the giving advice, presenting, all those elements that are not included in that exam at all.

"Teaching a computer to pass one of those exams based on having all the textbooks in them and past papers and things like that, I think you can do that. Would it make them a good broker? I think absolutely not."

Perkins and Marcham set up Yellow Bricks after walking away from a nationwide property services group deciding that corporate life was no longer for them.

They had a vision to establish a network of brokers that would deliver the best client experience they could while using their success to give back to the communities they work in.

Service is the only thing we care about, we don't manage brokers on how many mortgages they did last week, we don't look at any MI around that at all.Greg Marcham

"We just realised that it was all about numbers, it wasn't about people anymore," says Marcham. "And actually, I got into it to help people and actually by the end all I was doing was phoning people for numbers."

Yellow Brick was founded in Norwich in March 2018, starting off with just the two of them. It now has 72 people, including 65 advisers, the majority of whom are self-employed and working remotely, though some are employed by the firm.

The wider group also offers conveyancing, will writing and a financial planning service as an appointed representative of 2Plan.

On every mortgage that completes, Yellow Brick donates £10 to one of its three charity partners – cancer charity Big C, bereavement charity Nelson’s Journey, and animal sanctuary Pact – allowing clients to choose which one it donates to on their behalf.

It also gives fee-free advice to anyone working for the NHS and has pledged to plant a tree on every mortgage completion.

Part of the reason they set out in this way stems from their personal life experiences, says Marcham, a parent to three foster children plus four of his own, who says he wants to help those who "we don't necessarily naturally touch as a mortgage broker and probably never will", while Perkins says he wants to build a legacy for himself that he can be proud of.

Marcham says the industry needs to understand that it is making a lot of money for jobs that, though often stressful, are not necessarily as important to society as others. He says it has a duty to give back "otherwise society will fail".

Setting up for success

Since inception Yellow Brick has had to battle through Brexit, Covid, and the current interest rate hikes, which have rattled the property market.

But Marcham says tough market conditions have naturally increased the value of a broker, while also changing their work.

"You're not going to go into your bank now and get the very best rate, because the rates aren't particularly competitive compared to what they would have been previously," he says.

"So searching around actually becomes more advantageous and therefore, we've seen business levels continue to rise. But for the individuals themselves, I can only say we're having to do different things to make sure they can afford to pay their mortgage." 

Currently Yellow Brick brokers write a lot of remortgage business, while historically it has been mostly purchase.

He says: "The remortgage market is getting a lot more interesting; people want to contact you now six, seven months before worried about what their rate will be.

"And you're sort of doing damage limitation now and talking about ways they can keep their increasing mortgage down as much as possible, make it comfortable for them as best you can as opposed to old conversations where you were telling them how much they were saving per month, those days are finished unfortunately."

Despite the turbulent markets Yellow Brick has had a good run of client reviews on Trustpilot, which it uses to measure service levels, and hence business success.

The firm does not consider the number of mortgages written as a KPI and solely focuses on service, believing this means "you're going to always do right by the client". 

Of the close to 4,000 reviews to date, almost all are 5 stars, with only a handful of 4 starts and two unfavourable ones.

"[Service] is the only thing we care about, so we don't manage [brokers] on how many mortgages they did last week or last month and we don't look at any management information around that at all.

"We just want to know that every customer they did deal with had an exceptional service and we validate that through Trustpilot and getting the reviews to validate that service," says Marcham.

A five-star service

It starts with recruitment, says Marcham . "If we're interviewing someone, we will interview them around the key ethos we have, you know, give us some examples of your service, give us some examples of where you've helped your community.

"If there's examples then it's much easier for us to make a decision on those individuals. We've been very specific with that type of recruitment."

Next is setting the right remuneration strategy. Before opening its doors Yellow Brick set a higher than average remuneration level for brokers to help ensure it attracted the best talent to begin with. The pair estimate they pay about 15-20 per cent more than a conventional network.

This was also with a view to retaining brokers for longer and "recruiting for growth", says Perkins.

For clients, first and ongoing contact at Yellow Brick is always with their adviser, but before any new recruit sits in front of a client they will have undergone specific training, including role plays, to ensure their client service is in line with the firm's.

Their performance is then judged on the number and quality of reviews the person gets. If there is a lack of reviews, Marchant says, that can be a concern and trigger some further development and support work. Trends in reviews can also spark further investigation.

For a mortgage broker finding the best rate of the lenders that can lend to you is probably the easy bit of the job.Stephen Perkins

The firm also does spot checks with clients, Perkins says, but he feels no need to micromanage people to ensure service levels are kept to a high standard: "You've got to hire the right people and trust them to be able to give the service you want them to give."

Perkins elaborates that a good service means more than finding the cheapest mortgage, "you'll be going through the house buying process, if they need it, and explaining to them in detail.

"It's talking them through all the different options and decisions, make sure they make informed decisions. It might be looking at two or three different options with them and talking through the pros and cons.

"It is being available at all times for any questions, help them with the legal paperwork."

Helping clients

But it is also about helping the client with offering on houses, says Marcham. Yellow Brick does its own research on properties in the given area and then makes the offer to the agent on behalf of the client, taking emotional decisions out of the equation in trying to get the best deal.

"We find it's actually an end to end journey with ourselves as opposed to just the transaction itself," says Perkins.

This is where AI will always fail, the pair say.

They agree AI will have an increasing role to play in supporting brokers with things like lender research and checking affordability, but they doubt it will be able to replace the person, saying customers would not want to rely on just the algorithm.

Perkins also says he has come across many cases where at first sight the criteria does not fit, but after explaining the case to a lender it gets put through as an exception.

"There are so many people that fall between the cracks of criteria that I think an experienced broker has so much more value to add that the AI just won't do."

Besides, it is the service that counts, not finding the best rate, he says.

"For a mortgage broker finding the best rate of the lenders that can lend to you is probably the easy bit of the job. It's actually getting the deal through and the service, the chasing lenders, chasing solicitors [that's the hard bit]."

carmen.reichman@ft.com