A human must make the decision.

It is said about AI in advice with the confidence of a rule. Recommend the product, judge whether it suits the client, decide whether they can afford it, sign off the file: a person has to make the call.

It sounds like a rule. So I went looking for it.

It is not there. What is there is a harder question than the one the line asks: not who makes the call, but who answers for it. That is not the relief it sounds like.

What the regulator says about technology

Start with the FCA's own statement of its approach, the AI Update published in April 2024. Paragraph 3.2:

"Our rules, regulations and core principles do not usually mandate or prohibit specific technologies."

The word "usually" is the FCA's and it matters. But the direction is clear, and it is not a list of tasks a machine may not touch. The same document describes the FCA as "a technology-agnostic, principles-based and outcomes-focused regulator."

Then paragraph 3.45, which is the sentence the line is reaching for without knowing it:

"Firms that use AI as part of their business operations remain responsible for ensuring compliance with our rules, including in relation to consumer protection."

Remain responsible. Not that a person must decide. Search the whole document for "human" and it comes back twice: once as "humans", in a line about the benefit of AI to humans and businesses, and once inside the name of the Equality and Human Rights Commission. Neither is about who takes a decision. There is no human oversight in it, no human review, no human in the loop. Not as a requirement, not as a recommendation, not as a phrase. That is an absence of instruction, not an absence of duty.

Suitability: the rule binds the firm

Start with the recommendation. For a mortgage, the rule is MCOB 4.7A.2R:

"If a firm gives advice to a particular customer to enter into a regulated mortgage contract, or to vary an existing regulated mortgage contract, it must take reasonable steps to ensure that the regulated mortgage contract is, or after the variation will be, suitable for that customer."

The subject of that sentence is "a firm". The obligation is reasonable steps to ensure suitability. It does not say who or what does the thinking. It says who answers for the result, and it says the result is judged on the facts: MCOB 4.7A.5R requires the firm to base its determination "on the facts disclosed by the customer and other relevant facts about the customer of which the firm is or should reasonably be aware".

Protection has the same shape in different words. ICOBS 5.3.1R:

"A firm must take reasonable care to ensure the suitability of its advice for any customer who is entitled to rely upon its judgement."

Reasonable care here, reasonable steps in MCOB. Both addressed to the firm. Neither is a statement about people and machines. Both are a statement about accountability for an outcome, which no tool changes and no tool carries.

Affordability: the wrong party

Affordability is where the line goes further than the rules.

It is easy to talk about affordability as though the broker owned that decision. The affordability rules in MCOB 11.6 open by saying who they are for:

"This section sets out rules and guidance for lenders and providers under regulated mortgage contracts and home purchase plans, in relation to the assessment of affordability for the customer of these contracts."

The duty itself, in MCOB 11.6.2R, falls on the firm entering into the contract. It must assess whether the customer "(and any guarantor of the customer's obligations under the regulated mortgage contract or home purchase plan) will be able to pay the sums due", and it "must not enter into the transaction in (a) unless it can demonstrate that the new or varied regulated mortgage contract or home purchase plan is affordable for the customer (and any guarantor)".

And it is not unconditional. The rule opens "Except as provided in MCOB 11.6.3 R, MCOB 11.6.57 R (Interest roll-up mortgages) and MCOB 11.7", and MCOB 11.6.3R takes a list of cases out of it altogether: a like-for-like remortgage with no additional borrowing, an internal product transfer, a variation that adds nothing to the sum owed, a short capital repayment holiday. In those, nobody assesses affordability, because the rule does not reach them. Which is rather the point. It is a rule about which party owes a duty and when, not a rule about who or what performs a task.

That is the lender. For an adviser, affordability arrives through suitability instead. MCOB 4.7A.8G gives, as an example of the eligibility criteria to consider, "the expected affordability criteria of the mortgage lender".

This is not a small point of wording. An account of the rules that puts the lender's decision on the broker is not a stricter version of the rules. It is a different set of rules, and nobody wrote them.

Who "the firm" is, if you are an appointed representative

Here is where it matters how you are authorised, because not every broker is the firm.

For a directly authorised firm, the accountability reaches a named person. The Senior Manager Conduct Rules in COCON 2.2 include SC1, "You must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively", and SC2, on complying with "the relevant requirements and standards of the regulatory system". Paragraph 3.41 of the AI Update says all Senior Managers in SM&CR firms, including solo-regulated Core and Limited Scope firms, are subject to those rules.

A broker who is an appointed representative of a network is not directly authorised, and the Handbook chapter on the senior managers regime says in terms that it does not generally apply to them. SUP 10C.1.8G:

"In general this chapter does not apply to appointed representatives of SMCR firms. SUP 10A applies instead."

What does reach the business is the principal's responsibility. Section 39(3) of the Financial Services and Markets Act 2000:

"The principal of an appointed representative is responsible, to the same extent as if he had expressly permitted it, for anything done or omitted by the representative in carrying on the business for which he has accepted responsibility."

Anything done or omitted. Section 39(3) makes no exception for what was done with a tool. For an appointed representative, the answer to the question of who answers for it runs to the network as well, as if the network had expressly permitted it. That is in addition to the appointed representative's own position, not instead of it.

The duty that sits over all of it

The Consumer Duty does not change the picture. It confirms it. PRIN 2A.2.1R, "A firm must act in good faith towards retail customers." The AI Update, at paragraph 3.23, puts the Duty in one sentence: "Firms are required to act in good faith, avoid causing foreseeable harm, and enable and support retail customers to pursue their financial objectives." The firm again. The outcome again.

What the line was trying to say

The instinct behind that line is not wrong. Something important does sit there. It is just not a rule about who decides.

Nothing I read says a human must make these decisions. What the rules say is that a regulated party answers for them: the firm for suitability, the lender for affordability, and for an appointed representative, the principal as well, for anything done in the business it has accepted.

That is a harder standard than a rule about who decides, not a softer one. A rule about who decides can be met by putting a person in front of the screen. A rule about who answers cannot be met by anything except the result.

One boundary, because it matters and it is not a footnote. I have been reading the FCA's rules. Data protection law asks a different question about automated decisions, and since February this year it gives a different answer, in places that bear directly on protection. That is its own piece and I will write it.