Broker fee agreements and disclosure: getting the paperwork right before the work starts

Fee disputes rarely start with the fee itself. They start with a client who says they didn't understand what they were agreeing to, or a broker who can't quickly show when and how the fee was explained. Most of these arguments are avoidable with a fee agreement that's clear, signed before work starts, and kept somewhere you can find it again.

This is a practical look at how to structure a broker fee agreement, when to disclose fees, and what evidence actually holds up if a client, a lender, or the FCA questions how you were paid.

Why the paperwork matters more than the number

There's no fixed cap on what a commercial finance broker can charge, and reasonable fee structures vary a lot across bridging, development, and asset finance. What matters to a regulator or a court isn't whether the fee was high. It's whether the client had a fair opportunity to understand it, question it, and agree to it before committing time and money to a deal. Under the FCA's Consumer Duty, firms have to be able to show fees represent fair value and that clients weren't left to work out the true cost themselves after the fact.

A verbal fee conversation, however clearly you remember having it, isn't evidence. A signed agreement, sent and countersigned before work starts, is.

What a fee agreement actually needs to cover

Terms vary by firm and by deal type, but a fee agreement that will stand up to scrutiny generally needs to set out:

• The fee structure itself: fixed fee, percentage of facility, or a mix, and at what point in the process each element becomes payable.
• Whether the fee is payable on completion only, or whether any element (an arrangement fee, a retainer, a survey cost) is due earlier or is non-refundable.
• What happens if the deal doesn't complete, including whether the client owes anything for work already done.
• Any procuration fee or commission the broker receives from the lender, so the client can see the full picture of how the broker is being paid on the deal.
• How and when the fee will be collected, whether that's an invoice, a deduction from the facility, or a separate payment.
• A clear statement of who the broker is acting for, since this affects how a client should read any advice given.

None of this needs to be lengthy. A two-page engagement letter that a client actually reads is worth more than a ten-page document that gets skimmed and signed on trust.

Disclosing commission alongside your own fee

Where a lender pays the broker a procuration fee on top of any client fee, that needs disclosing too. A client weighing up cost should be able to see the total remuneration a broker stands to earn from the deal, not just the part the client is directly invoicing them for. Leaving this out because it comes from the lender rather than the client is the kind of gap that looks deliberate in hindsight, even when it wasn't.

Timing: before the work starts, not after

The fee agreement should be signed before meaningful work begins, ideally as part of onboarding rather than as a document that trails behind the deal. Packaging an application, approaching lenders, or doing any real work on a client's behalf before the fee basis is agreed puts the broker in a weak position if the relationship later sours. It also runs against the spirit of Consumer Duty, which expects clients to have the information they need at the point they need it, not retrospectively.

This ties directly into the wider client onboarding process. If fee disclosure is baked into the first step of onboarding, it stops being a document someone has to remember to chase later in the deal.

Evidencing that the client understood

A signature proves the client agreed to something. It doesn't, on its own, prove they understood it. Where fees are complex, tiered, or involve multiple elements, it's worth keeping a short record of the conversation where the fee was explained: a dated email summarising key points, a call note, or a follow-up message confirming the client's questions were answered. This matters most for higher-fee or unusual structures, where a regulator or ombudsman is more likely to ask how the client's understanding was actually tested.

• Keep the signed fee agreement against the client file, not in a personal inbox or a folder only one person can access.
• Record the date the agreement was sent and the date it was signed, and flag any gap that suggests work started before sign-off.
• Note any changes to the fee structure mid-deal, with a fresh confirmation from the client rather than an assumption they'll accept the revision.
• Store any commission disclosure alongside the fee agreement, not as a separate document that's easy to lose track of.

Most fee complaints aren't really about the amount. They're about a client feeling like they found out too late, or found out from somewhere other than the broker.

When fees change mid-deal

Deals move. A facility gets restructured, a lender requires additional work, or the scope of what the broker is doing expands. Where any of that changes the fee basis, the client should be told before the new work is done, not billed for it afterwards as a surprise. A short addendum or confirmation email, signed or acknowledged, is usually enough. What isn't acceptable is treating the original agreement as covering whatever the deal eventually turns into.

Building this into day-to-day practice

Firms that handle this well tend to have a standard fee agreement template that's reviewed periodically rather than reused unchanged for years, a fixed rule that no packaging work starts until the agreement is signed, and a central record of every agreement rather than one held per adviser. That last point matters more as a brokerage grows. A structured compliance workflow that attaches the signed agreement, any commission disclosure, and a log of when each was sent and signed directly to the client record turns 'can you show me the fee agreement for this client' into something that takes seconds rather than a search through old emails.

It's also worth looking at fee disclosure alongside your firm's broader Consumer Duty approach, since fair value and clear communication are two of the same four outcomes the FCA expects firms to evidence. The NACFB publishes member guidance on fee practice that's worth reviewing if your current template hasn't been updated in a while.

None of this is complicated to put in place. It just needs to happen consistently, at the start of every relationship, rather than being reconstructed after a client has already asked an awkward question.