This is correct. While in AUTO, the middle knob will control the maximum fan speed.
The reason is, on the older 2nd gen cars, on AUTO the fans would go full blast when you get into the car because the climate system was trying to reach the target temp as quickly as possible, but many people did not like the noise and intensity. Now, MINI let's you choose how high you want the fans to go. The fans can go lower automatically, but they'll never go higher than you specify.
I, personally am fine with the fans going on full and when I drive, I crank it up and let it do it's thing, but I am coming from a Countryman so I'm used to that behavior.
I just had the fan increase in Auto, so I know it will work. It just doesn't do it as much as my Lexus did. I now like the fact that I can set the desired intensity and then the fan will only kick up when I really need it to.