Association lobbies for legislative change

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Not to be left behind in the growing discussion about cancellation fees, one industry association is calling for reformation to provincial law.

“The MBABC is continuing its efforts to seek legislative change to an outdated mortgage broker licensing statute in BC (that prohibits advance fees),” Samantha Gale, CEO of the Mortgage Brokers Association of British Columbia, told MortgageBrokerNews.ca. “The Mortgage Brokers Act is still on the BC legislative agenda.”

Brokers in British Columbia are prohibited from charging advance fees, which include cancellation fees.

And as the discussion – and debate -- around cancellation fees has grown, the MBABC is renewing its effort to lobby the provincial government to update its policy on these, and other, advance fees.

The association shared with MortgageBrokerNews.ca a letter previously sent to Financial and Corporate Sector Policy Branch of the Ministry of Finance arguing in favour of reformation to section 5 of Business Practices and Consumer Protection Act, which prohibits the use of advance fees.

In it, the MBABC argues brokers may  be  reluctant  to  take  on difficult  residential  mortgage  clients when their  fee  is  contingent  on  their  application actually  being  approved  and  funded.

“Often mortgage files require many hours of preparation, document management and negotiation,” the association writes. “Sometimes mortgage commitments are  obtained  by  mortgage  brokers  after  they  have  invested  significant amounts of time into the file, but the client will eventually opt for alternative financing or decline  the  offered  financing – this  can  happen  even  at  the  last  minute,  just  prior  to closing.”

In these cases, the MBABC argues brokers, under the current legislation, have no way of collecting compensation for work already done. 

“All mortgage brokers who deal in residential mortgages are effectively prohibited from taking advance fees in order to assist in the prevention of a small number of fraudsters from taking advantage of the public,” the association writes. “Most professionals, including lawyers, accountants and realtors are able by contract to negotiate advance fees.”
  • Walid Hammami on 2015-10-09 9:52:21 AM

    Yep, Exactly what I said before: An unjust law is no law at all.

    Lex iniusta non est lex (Latin: An unjust law is no law at all), is a standard legal maxim. It originates with St. Augustine,[1] and was used by St. Thomas Aquinas.[2]

    This view is strongly associated with natural law theorists, including John Finnis and Lon Fuller.[3]

  • bob on 2015-10-09 11:05:43 AM

    what will brokers do if lenders start charging for cancelled application? After all you've wasted their time as well? im sure Brokers will be up in arms if that happens.

  • John on 2015-10-09 3:40:59 PM

    It's every consumers right to freely shop for any product or service that they wish. It's also every consumer and professional's right to enter into a basic contract for service. It's a free & fair market (or should be). And bob, the brokers' relationships with lenders are business-to-business relationships that are already governed by the very efficiency ratios that the current unfair legislature jeopardizes.

  • Wayne Campbell, Prince George on 2015-10-09 5:09:09 PM

    Bob;

    Brokers already pay lenders for cancelled applications. That's what funding ratios are all about

  • Dustan Woodhouse on 2015-10-11 1:26:56 PM

    This is a slippery slope. One not worth stepping onto in my opinion.

    I would rather focus my time and energy on being better at what I do and not losing clients at all.

    Having the right to charge clients I do lose a few hundred dollars is a right I will never exercise. Such a thing strikes me as petty and weak on the part of the Broker.

    instead I will strive to improve my skills so that very few clients ever leave me.

    I look forward to differentiating myself should this legislation pass as a Broker with NO exclusivity agreement and NO cancellation fees.

    I will earn my clients business on merit, not coercion.

  • Mark A. on 2015-10-14 12:39:52 PM

    Surprisingly naive Dustan, but "the right" none-the-less, should still be yours. That's the point.

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