A calculator under a magnifying glass - the screen of the calculator reads, 'Fees'.

The Consumer Duty was brought in to replace the ‘Treating Customers Fairly’ principles on ‘open products’ in July 2023, and in July 2024 when it encompassed ‘closed products’ as well, we surmised that some financial firms, including mortgage brokers had increased their fees as a result. What Is Consumer Duty

Six months later, let’s take a closer look at the impact of Consumer Duty on mortgage broker fees.

The aim of Consumer Duty was to ensure that financial advisory firms set clear standards and could justify their fee-charging model, rather than charging at their own discretion.

We were concerned that the additional processes and checks a mortgage broker would have to go through on each case meant that they would feel justified in charging the customer for that time.

However, according to Financial Reporter, although the average fee for mortgage advice remains largely unchanged at around £500, there has been a positive impact of Consumer Duty meaning that fewer people are being charged £1,000 or more.

Moreover, ‘13.1% of respondents said they were charged £200 for advice, with just 10.2% being charged £1,000.’ Financial Reporter

The most interesting part of the article to me, however, is that ‘76.1% do not believe it’s fair for brokers to charge a fee if they receive commission from the mortgage lender and 9.7% of respondents were not aware that their mortgage broker would have received a commission from the lender in addition to the client fee charged.’

Some customers are also still being charged a percentage of their mortgage value, which doesn’t necessarily correlate with the amount of work or expertise the broker has to dedicate to the case. Financial Reporter rightly point out that this may not justified as fair…

In our view, whilst the findings of research do appear to show a positive impact on customer charges, I find it remarkable that the transparency of how mortgage brokers are paid still isn’t there.

There seems to be enough people unaware that they are paying for advice while that adviser is also receiving payment from lenders to make the ‘charges’ unfair. This looks to be backed up by the 76.1% of people who say the same.

Let’s get something clear about mortgage advice fees…

  • Mortgage advisers and brokers can charge for their time, administration and expertise in dealing with your mortgage enquiry. Their fee can be set by them, but should be fair and justified
  • All mortgage advisers and brokers receive a commission from any lender they secure a mortgage with. This is usually a percentage, calculated on the loan size and mortgage type
  • Mortgage advisers and brokers DO NOT HAVE TO CHARGE you anything personally (they are always paid lender commission), but some do choose to add other charges to their customers.

And just to make it absolutely clear, MK Mortgages will not cease to offer fee-free mortgage advice. Regardless of how large or small your mortgage or remortgage may be, we will continue to offer our time and advice to all who need it, within my fee-free business model.

My time and costs will remain paid for by the commission all mortgage lenders pay their advisers.

Contact me today for fair, whole of market mortgage advice.