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Is the current commission model pushing shorter fixes? Mpowered’s latest Rate Stuff podcast sparks debate.

ended 18. September 2025

In the latest episode of The Rate Stuff from Mpowered, here, Peter Stimson notes that two-year fixes are still outselling five-year deals, even though rates appear to be at or near their floor. MPowered suggest that the current upfront commission model may unintentionally encourage shorter fixes. As a solution, they float moving broker commissions to annual payments over the fixed term, removing any perceived incentive to place clients on shorter products.

We’d like your views:

  • Do you think this is a real issue in the industry today?
  • Would annualised commission change your recommendations in practice?
  • How would it affect your firm’s cashflow and business model?
  • Does it raise wider questions around clawbacks, lapses, product transfers and early repayment?
  • Should the whole model be reviewed?
  • Would a hybrid approach — part upfront, part annual — work better?
  • What other models could align with Consumer Duty while keeping advice product-neutral?

7 responses from the Newspage community

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Rohit Kohli
Director at The Mortgage Stop
From our perspective, advice is always based on the client’s circumstances, not on commission. If a five-year fix is right, we’ll recommend it, and the same goes for a two-year or even 10-year+. So I don’t see annualised payments changing the way we advise. That said, procuration fees themselves are overdue a review. The amount hasn’t kept pace with the work and due diligence intermediaries must now carry out, so an increase is justified which may make transisiton to annual payments easier. A regular commission model could strengthen firms business resilience, but the industry is built on upfront payments, so any change would need a transition. A hybrid option, like protection’s indemnity vs non-indemnity structure, could work. But it raises bigger questions on clawbacks, product transfers, early repayment and remortgages and whether the whole commission model needs a rethink.
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Patricia McGirr
Founder at Repossession Rescue Network
Interesting concept but utterly unworkable in practice. Suggesting brokers may be to blame for short fixes is the kind of fake news that further undermines confidence in the profession. Homeowners choose flexibility because the market is unstable, not because advisers are chasing commission. Working as I do with a number of brokers I’ve seen a huge increase in the volume of work and time needed to get a deal over the line. That’s simply not reflected in what brokers earn. Annualised commission would strangle most firms. If that is the plan, then lenders should stop dressing it up and just put brokers on payroll. The real scandal is clawbacks and lender practices that trap consumers. Until that is addressed, this whole debate is smoke and mirrors.
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Justin Moy
Managing Director at EHF Mortgages
The whole commission model is due for a wholesale review, as it is not in line with what many would consider Consumer Duty. Whilst the mix of short and longer-term deals is managed externally by compliance reviews, ultimately, if you pay someone the same for a 2-year or 5-year product, you will drive certain behaviours with a minority of brokers. But any move from upfront to some form of drip-fed commission may be too much for any larger broker firm to manage its immediate cashflow needs, as much as the smaller brokerage. But the remuneration needs to reflect the additional work required in most cases these days, given commission rates have been the same for around 20 years or so. The vast majority of brokers will do what is right for the client, and not what is needed for cash flow, but the industry needs to consult on remuneration soon.
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Dariusz Karpowicz
Director at Albion Financial Advice
I don't believe this problem truly exists—perhaps a tiny minority might lean towards shorter fixes, but it's hardly a widespread industry issue that demands such drastic reform. The real scandal isn't commission structure but the chronic underpayment of procuration fees, which haven't budged in two decades despite regulatory burdens multiplying like rabbits. Any shift to annualised payments would throttle most firms' cashflow faster than you can say "Consumer Duty". The genuine issues - product transfer restrictions, and lender practices that trap consumers - deserve attention before we start fixing problems that barely exist in the first place.
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Scott Gallacher
Director at Rowley Turton
There’s a clear conflict of interest here, one I’ve highlighted to clients for years. Over a 25-year mortgage, a two-year fix creates roughly 12 sales opportunities for the broker, compared with just four for a five-year fix. That inevitably skews incentives. While the upfront commission model plays a part, moving to fee-based payments doesn’t fully resolve the issue. The only real safeguard is strong advice standards, full disclosure and a genuine focus on what’s best for the client, rather than what generates the most transactions or income for the broker.
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Daniel Hobbs
CEO at New Leaf Distribution
I don’t know any brokers that base their advice on selling shorter fixes as a way to make more money. Remember, it wasn’t long ago when five year rates were the norm. This is indicative of the times we live in with a world of higher rates and volatility meaning clients are wary about tying themselves into a rate for the long term.
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Elliott Culley
Director at Switch Mortgage Finance
Advice on two, three or five year fixed rates are based on the needs and the circumstances of the client at the time. Any adviser favouring two year fixed rates due to commission would be found out fairly quickly in the industry, provided the firm has good compliance with the key performace indicators alerting to this issue. Changes to commission is an interesting topic, but immediate cashflow would be an issue for a lot of companies if the model was suddenly changed to paying a smaller proportion every year.