Aipedia: Mortgage brokers

Telling borrowers you use AI

Aipedia, by the Apex broking team · Last reviewed 2026-10-27

There is no specific FCA rule requiring mortgage brokers to disclose AI use, but data protection law already requires transparency about how borrowers' data is processed. The FCA may consult on disclosure for digital journeys in 2027, and clear statements also help when a borrower later questions how advice was produced.

Part of: AI in Mortgage brokers

In short

Mortgage brokers should explain their use of AI in three places: the privacy notice, which must cover how personal data is processed; terms of business, which set expectations about how advice is produced and checked; and the fact-find, where borrowers are told about recording and AI notetakers. The Data (Use and Access) Act 2025 sets safeguards for solely automated significant decisions, including the right to human intervention. FS25/6 says disclosure changes for digital journeys will be explored, with any consultation expected in 2027. Keep records of what each borrower was told.

Why disclosure matters

Borrowers may assume some AI is involved without knowing where. Telling them supports the Consumer Duty's expectation that firms enable and support customers (PRIN 2A.2.14R), meets data protection transparency duties, and gives the firm a clear record if a borrower later complains that a tool, not a person, made a decision. It also reduces surprise when a notetaker joins a call or a chatbot answers a question.

What the rules say

Automated decisions: section 80 of the Data (Use and Access) Act 2025 substitutes UK GDPR Articles 22A to 22D, fully in force from 5 February 2026 (SI 2026/82). Solely automated significant decisions need safeguards: information about the decision, the chance to make representations, human intervention and the ability to contest (Art. 22C). Special category data, such as health data in protection advice, is restricted in those decisions (Art. 22B).
Transparency: the ICO's AI guidance explains how data protection transparency applies to AI processing.
FCA: there is no AI-specific disclosure rule. FS25/6 says disclosure and financial promotion rule changes to support digital journeys will be explored, with any consultation expected in 2027 (paras 4.12 to 4.14).

What to say, and where

Document	What to cover
Privacy notice	Which AI and automated tools process personal data, for what purpose, who provides them, retention, and any automated decisions with significant effects
Terms of business	That AI supports research, drafting or administration; that a qualified adviser reviews recommendations; what automated reminders the firm does and does not promise
Fact-find or meeting invite	That the meeting will be recorded and transcribed by AI, why, and how to opt out
Chatbot screen	That the user is talking to an automated assistant that does not give personal advice, and how to reach a person

Keep wording specific to your firm. A statement that the firm "may use AI" tells the borrower very little.

Consent records for notetakers

Record what each borrower was told about recording and AI analysis, when, and how they responded. Consent may not be the lawful basis for the processing, but a clear record helps show transparency and respect for the borrower's choice. For protection interviews, check that the condition for processing health data is documented. See AI notetakers in fact-finds.

What can go wrong

Illustrative scenario: a borrower complains after a declined application, saying they did not know a chatbot had pre-screened them or that an AI tool had chosen the lender shortlist. The firm's privacy notice mentions "technology" in general terms only, and there is no record of the borrower being told. The firm can show an adviser approved the recommendation, but the lack of disclosure makes the complaint harder to answer and suggests the process was not under control.

Disclosure and PI

Clear disclosure does not change whether advice was negligent, but it helps the firm show what the borrower was told and agreed to, which matters when defending a complaint. Separately, firms should describe their AI use accurately to their own PI insurer when asked. See does broker PI cover AI mistakes and what to document about AI use.

Practical controls

List the AI tools you use and map each to a disclosure.
Update privacy notices and terms of business together.
Explain adviser review of AI-assisted recommendations.
Add bot disclosures to chatbot journeys.
Review wording when the 2027 FCA consultation is published.

Apex arranges PI for mortgage brokers and can help you describe your AI use consistently to borrowers and insurers. See the mortgage broker AI hub.

Sources

Frequently asked

Do mortgage brokers have to tell clients they use AI?

There is no specific FCA rule requiring it. Data protection law requires transparency about how personal data is processed, and automated decision safeguards apply to solely automated significant decisions. FS25/6 says disclosure changes may be consulted on in 2027.

What is a solely automated significant decision?

A decision made without meaningful human involvement that has a legal or similarly significant effect on someone. If a broker's tool makes one, UK GDPR Art. 22C as substituted by the Data (Use and Access) Act 2025 requires safeguards, including human intervention and the right to contest.

Will the FCA require AI disclosure in future?

Possibly. FS25/6 says the FCA will explore changes to disclosure and financial promotion rules to support digital journeys, with any consultation expected in 2027. It has not said what those changes will contain, so firms should watch for the consultation.

Should terms of business mention AI?

It is good practice to explain where AI supports the service and that a qualified adviser reviews recommendations. It sets expectations and gives the firm a record if a borrower later questions how advice was produced.

Check your PI covers how you use AI

Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.