Brokers weigh the future of the no-fee model
The practice of offering fee-free mortgage advice is gaining ground among brokers in the UK, with proponents arguing that it increases access and transparency for clients. Yet, despite growing consumer interest, most mortgage advisers continue to charge fees, citing rising business costs and regulatory pressures.
Fee-free advice means that clients do not pay for a broker’s services; instead, brokers receive a procuration fee from the lender upon completion. “For all the work that we do for our clients, there’s no hidden costs, there’s no fees to be paid to us for our advice or for our work or administration, it’s purely we get paid by the lender,” said Gary Boakes (pictured top left), director at Verve Financial.
For some firms, the decision to adopt a fee-free model was shaped by market realities and a desire for fairness.Boakes said his firm first offered free advice because builder partners expected it for new builds, and it seemed unfair to charge some clients but not others based on the property type. Over time, the approach felt more transparent and consistent, allowing the firm to avoid justifying fees and to focus on openness with clients. Despite rising costs, Boakes said they continue to offer free advice as long as it remains viable.
David Hollingworth (pictured top centre), associate director at L&C Mortgages, said that fee-free advice has been central to his firm’s ethos for more than 25 years. “We recently reached the milestone of 1 million applications for our customers over that time,” he added. “If each of those applicants had had to pay a fee of £300, it amounts to a huge saving of £300 million for those customers.”
For clients, the main benefit of using fee-free advice is clear: they save money at a time when costs are already high. “The obvious benefit for clients seeking fee-free mortgage advice is that no fee is required at any stage of the mortgage journey,” said Gerard Boon (pictured top right), managing director of Boon Brokers. “They do not need to worry about hidden fees arising unexpectedly.”
Despite these advantages, fee-free advice remains the exception rather than the rule. “The majority of mortgage advisors that I know, the majority of mortgage advisors in my local area do charge fees for what they do,” Boakes noted.
Boon echoed this, attributing the prevalence of fee-charging brokers to business structures and network requirements. “Networks, who assist firms with compliance, tend to charge large fees to their appointed representatives and take a cut of their commission,” he pointed out. “As a directly authorised company, we do not share our commission with any network party, meaning that we can operate profitably without the need to charge fees for advice.”
Unfortunately, there are some misconceptions about the quality of fee-free advice. Boon stressed that the perception that “you get what you pay for” does not apply in mortgage broking. “To be clear, there is no evidence of this,” he said.
“To the contrary, fee-free online mortgage brokers tend to have a far larger number of five-star online reviews and overall review ratings than those brokers who charge fees, proving their quality of service,” he said. However, Boon acknowledged that fee-free brokers are less likely to offer face-to-face service, which some clients may still value.
Hollingworth also challenged the notion that fee-free services won’t offer the necessary back up and service to reach mortgage offer and completion in a timely manner. “We work tirelessly to improve the customer journey and make it as efficient as possible without compromising on the service we provide,” he said.
Looking ahead, brokers expect demand for fee-free advice to grow, especially as consumers seek to reduce costs amid economic uncertainty. However, the sustainability of the model will depend on whether brokers can balance rising costs with the need to remain competitive.
“While procuration fees have remained unchanged for 15 years, regulatory and operational costs have risen, making it increasingly difficult for brokers to sustain a fee-free model,” Boakes said. “To be honest, I think fewer brokers will be able to offer free advice in the future.”
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