New research reveals demand for transparency in broker compensation
Majority of mortgage borrowers in the UK remain uncertain about how brokers are paid, despite regulations requiring disclosure of fees and commission, a recent study has found.
The research from whole-of-market brokerage Boon Brokers indicates that while mortgage brokers provide written information in line with Financial Conduct Authority (FCA) rules, many consumers struggle to understand the details, leading to calls for greater clarity and transparency.
The survey explored public awareness of broker remuneration, examining both direct client fees and commission from lenders. Although brokers are obliged to disclose these earnings, 66% of respondents said they did not fully grasp how brokers receive both fees and commission. A further 34% reported only a vague understanding, lacking confidence in the specifics.
The findings also revealed that only 31% of those surveyed understood that lender commission can vary by case. The remainder were unsure how broker income is structured, with some mistakenly believing all lenders pay the same commission or that brokers receive a fixed fee regardless of lender. This confusion extends to the practice of brokers charging both a direct fee and earning commission—commonly referred to as “double dipping”—with 85% of respondents stating this should be clearly explained to ensure fairness.
Notably, 4% of participants assumed that paying a direct fee meant the broker would not also receive commission. The research suggests that, even when disclosures meet FCA requirements, borrowers often lack the clear explanations necessary to fully comprehend broker compensation.
The demand for transparency was a consistent theme throughout the study. While legal requirements mandate disclosure, 96% of respondents expressed a preference for plain-language explanations of both broker fees and commission, provided in writing and verbally. Despite this, 67% felt they had not received a clear breakdown, and 8% said fees and commission were barely mentioned at all.
Trust in brokers was closely linked to transparency, with 87% of those surveyed indicating that clear explanations of fees and commission influenced their confidence in a broker. Furthermore, 60% wanted explicit written details, and 43% said they would only work with a broker who provided a full explanation of how fees and commission are calculated.
The study also identified generational differences in disclosure preferences. Among respondents aged 25 to 34, 55% preferred both written and verbal explanations. In contrast, 72% of those aged 55 to 64 favoured written documentation, with only 27% prioritising verbal communication. This suggests that older borrowers place greater importance on formal, written disclosures.
“Mortgage brokers are required by FCA regulations to provide clients with clear breakdowns of their commission,” said Gerard Boon, managing director at Boon Brokers. “However, what is often missing is a jargon-free explanation that helps borrowers fully understand both the broker fees and commission that they earn. Providing transparent, easy-to-understand information is essential to ensure clients can make informed decisions and maintain trust in their broker.”
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