Act review looks at road rep licensing

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That review of B.C.’s broker legislation includes a look at whether mortgage specialists should be rolled into the regs, effectively holding their feet to the fire alongside channel competitors.

“Section 11 provides an exemption from registration for persons employed by savings institutions, which includes banks and credit unions,” reads the discussion paper now being circulated across the industry as the province’s ministry of finance reviews the current legislation. “This has become an issue for some mortgage brokers in BC who claim that some bank representatives are either brokering or co-brokering mortgage applications and placing borrowers with lenders other than the bank that employs them.”

Indeed.

Brokers continue to sound the alarm about road and bank reps that overstep the mark and effectively take on the role of brokers by helping to arrange financing outside of their institutions.

Any move that would take B.C. in the direction of required licensing for those bank workers would set a precedent for other provinces to follow. It would also answer broker calls an even playing field – not only for themselves but consumers.

It’s an argument regulators seem be increasingly receptive to hearing.

“There may also be a consumer protection element to the problem,” reads the white paper, in posing the question of mortgage specialist inclusion. “Borrowers who are dealing with a bank employee may find themselves being offered a mortgage product with a lender they have never heard of.”

The ministry’s review should provide better framework for the registration and regulation or mortgage brokers in B.C, argues the government. Its review is geared towards identifying and addressing legislative aspects that may expose consumers to financial risk or “create undue inefficiencies in the market.”

It has, in fact, given all stakeholders until February 28, 2013, to submit their comments and suggestions electronically to: fcsp@gov.bc.ca. CAAMP, in consultation with provincial association MBABC, is now preparing a response, writes CAAMP Chair Daryl Harris.
 
 

  • Rick Lunny on 20/12/2012 8:14:52 AM

    All very interesting that BC legislators are considering regulating bank mortgage road reps. However they have no power to do so. As bank road reps are bank employees they are federally, not provincially, regulated. The provinces have no power over the banks and the banks have traditionally fought hard whenever a province attempted to undermine this authority. Unless OSFI, the national bank regulator, takes a view any provincial legislation will be toothless and meaningless.

  • Gord McCallum on 20/12/2012 8:59:38 AM

    I'm of two minds on this and I think it requires careful consideration of what the likely outcomes and possible unforeseen outcomes might be...

    On one hand, this may create a more level playing field and make it harder for the bank specialists to do what they do...on the other hand we just may kick the hornet's nest and destroy one of the key differentiations that our channel has - the fact that we're independently licensed and have access to multiple lenders.

    Careful what we ask for...

  • An Insider on 22/12/2012 10:00:54 AM

    Agree with Gord's comments. Additionally do you want the Banks creating these large brokerages with a lot more money to throw towards their internal staff. Name an independent that can match them dollar for dollar

  • An Insider on 22/12/2012 10:02:52 AM

    Rick, I thought on the wealth side there was some provincial regulations regarding bank employees. I may be wrong, not an expert there.

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