A recent article from Mortgage Introducer highlights concerns within the mortgage industry regarding the potential impact of operating a commission only business model for broker services.

The headline reads, ‘Mortgage industry could see huge loss of brokers over fee-free charging’ (Mortgage Introducer), leading the reader to believe that either they as a commission-only model should be charging their customers, or as a mortgage customer, you ought to be paying for advice…

The article mentions a study from Boon Brokers, which found that over a third (36.6%) of borrowers paid broker fees based on a percentage of their loan amount, a practice with which 67% of respondents disagreed. Additionally, 76.1% of participants felt it was inappropriate for brokers to charge a fee if they also receive a commission from lenders (which incidentally they all do!). The survey indicated that the average broker fee is approximately £500. (Average Mortgage Broker Fees in the UK Jan 2025 Study).

After reading the article, MK Mortgages owner, Marc Kavanagh felt conflicted. He has run a non-fee charging mortgage broker service since 2006 and has no intention of changing his business model, but he can understand why some firms do charge customers despite receiving commission from lenders.

‘Over the years I have developed a process that allows me to conduct my meetings over Zoom, Teams, WhatsApp, email and the phone. As a business I use as much technology as possible and this means that I have very few expenses in the form of office overheads, staff wages, pensions, holiday pay and so on. If you would like me to visit your home to discuss your mortgage needs, I will of course do so, but travel expenses may be another cost that other brokers feel they need to compensate for.’ Marc Kavanagh

Marc also agrees with Gerard Boon, managing director of Boon Brokers, (whose firm also operates a fee-free model) that while 36.6% of survey respondents paid a fee based on a percentage of the loan amount, this may not be entirely fair, especially when Consumer Duty expects justification to ensure fair outcomes. Boon said, ‘Given that the loan sum is not correlated with a broker’s efforts in processing a case, charging on this basis seems unjust.’

Marc reiterates this by saying, ‘The amount of paperwork, and the time spent researching different mortgage products rarely changes for a straightforward case, and higher numbers being involved certainly doesn’t make it more difficult to find a good mortgage product. That being so, why should a customer pay more just because they have a larger budget for a property?’

Marc believes the Mortgage Introducer article and the whole debate highlights the need for a balanced approach that ensures fair compensation for mortgage brokers while maintaining transparency and fairness for customers.