MacBook Pro 16" M1 Pro won't connect to iPhone hotspot without maximum compatibility.

I've been using this laptop for more than half a year and during this time I noticed my previous phone (a Samsung) could not create a hotspot MacBook can connect to - unless I explicitly set the hotspot setting to transmit in a lower band, meaning 2GHz.

I shook it off and carried on thinking the problem was the phone and not the laptop.

Fast forward to this week and I'm using a new iPhone together with my MacBook Pro. To my surprise, again, the phone's hotspot won't transmit without changing its setting to Maximum Compatibility, which isn't ideal at all, as it boats lower speed.

I would assume this isn't intentional, since these are both Apple products, their compatibility should be maximized from the get-go...

Would love someone's input on this, since I have not seen much help on the internet so far.