How Mortgage Brokers Should Disclose a Referral Fee From a Real Estate Agent Without It Feeling Dodgy

Referral relationships between mortgage brokers and real estate agents are common, and there's nothing wrong with them existing. What gets brokers into trouble isn't the arrangement itself, it's the silence around it — a client finds out months later, usually from someone else, that their broker pays or receives a referral fee tied to the agent who sent them, and suddenly a perfectly normal business arrangement feels like something that was hidden from them 💖. The fix isn't complicated. It's just something most brokers avoid saying out loud because it feels awkward, and awkward things get skipped when you're busy.

What most brokers get wrong

The most common mistake is disclosing the referral fee only inside a long-form document — a credit guide, a privacy disclosure, a bundle of paperwork signed at the start of the process — and never actually saying the words out loud to the client. Technically disclosed, practically invisible. If a client can't recall you ever mentioning it, it wasn't really disclosed in any way that matters to how they experience the relationship.

The second mistake is treating disclosure as a one-time, tick-a-box moment rather than something you reinforce naturally in conversation. A client who hears "just so you know, [agent] and I have a referral arrangement, here's what that means for you" in a normal conversation trusts it more than a client who has to go find the clause themselves.

How to actually build this into your process

• Say it before the paperwork, not instead of it. Verbal disclosure builds trust; written disclosure covers your obligations. You need both, and the verbal one should come first chronologically in the client relationship.
• Use the same wording every time. A consistent script (like the one above, adapted to your actual arrangement) means you're not improvising the awkward bit under pressure, and it means every client gets the same standard of disclosure.
• Document that you said it. A short note in your CRM ("verbal referral disclosure given [date]") or the same-day written follow-up email gives you a record beyond "I'm sure I mentioned it."
• Revisit your actual arrangement periodically. If the referral fee structure changes, your script needs to change with it — don't let the disclosure language go stale while the underlying arrangement evolves.

Mistakes to avoid

• Only disclosing the referral fee inside a long document the client is unlikely to read closely.
• Waiting for the client to ask, rather than raising it yourself.
• Being vague about the mechanics of the fee when a client does ask a direct question.
• Assuming a franchise or formal partnership structure makes disclosure less necessary — if anything, it needs to be clearer.
• Letting the disclosure script go stale after the underlying referral arrangement has changed.

Frequently asked questions

Does a referral fee arrangement mean I have to recommend a specific lender?

No — a referral fee relates to how a client came to you, not which loan you recommend for them. Your obligation to act in the client's best interests when recommending a credit product exists independently of any referral arrangement, and it's worth saying that explicitly to clients rather than assuming they understand the distinction.

Do I need to disclose the exact dollar amount of the referral fee?

This is where the honest caveat matters: requirements and best practice can differ depending on your licensee, aggregator and the specific arrangement, so this isn't something to guess at — check your current written disclosure obligations rather than relying on a general answer. What's consistently true is that vague, hard-to-find disclosure feels worse to a client than specific, plainly stated disclosure, even where the minimum legal requirement might technically be lower.

What if the client seems uncomfortable after I disclose it?

Let them sit with it and ask questions rather than rushing to reassure them out of the discomfort. A client who's allowed to ask "so does this mean you're not really independent" and get a straight answer usually ends up trusting you more than one who's talked past the moment with reassurance alone.

Should this disclosure be different for a repeat referral partner versus a one-off?

The core disclosure shouldn't change, but the context can — with a long-standing formal partnership, it's worth being upfront that the relationship is ongoing and structural, not a one-off courtesy, since that's a more significant thing for a client to know than an occasional informal referral.

Keep reading 🤝

• How to Market a Mortgage Broking Business
• How to Build a Referral Network Between Lawyers, Accountants and Financial Planners
• How to Build Referral Partnerships