Banks are 'getting away with it,' says broker

by |

Brokers are disappointed that the government’s move to tighten up the complaints process for banks does nothing to address the issue of unlicensed mortgage specialists or the fact their employers effectively control the process.

But for brokers, it is still banks policing themselves.
“The banks have been getting away with it, quite frankly,” says Steve Garganis, a broker with Mortgage Intelligence, describing the current monitoring and complaint process. “Are these third party companies truly independent? I don’t think the new regulations go far enough, and I’m a little disappointed the government isn’t more clear in what they are trying to accomplish – creating true accountability.”
Ottawa announced tougher consumer protection regulations for banks this week, extending the monitoring and enforcement powers to the Financial Consumer Agency of Canada. While the banks will still be able to handpick their complaints ombudsmen, those third parties will be subject to greater oversight.
Mortgage professionals and consumer groups object to that, but what adds to the frustration of brokers is that mortgage specialists are operating without any real standards, at least none that mortgage brokers must uphold, argues Garganis.
“They are, in effect, mortgage brokers – without the accountability,” says Garganis. “There is nothing to keep them up to a standard. Mortgage specialists have no licensing requirement, no educational requirement – these new regulations have no real impact on this reality.”
The government isn’t addressing that with these changes billed as living up to transparency mandates.
“Our government is committed to protecting consumers,” said Finance Minister Jim Flaherty in the announcement. ”These new rules create a stronger, more independent consumer complaint system, by setting high, pro-consumer standards that all banks and authorized foreign banks must meet.”
RBC, TD withdrew from OBSI last year - continued on page 2

read more > 1 2

  • Versico Financial Inc. on 2013-04-12 9:11:46 AM

    If the brokerage industry wants to see these bank road warriors licensed then it should put pressure on the Provincial mortgage brokerage regulators to stop exempting these individuals from their respective legislation's.
    The bank contracts with these agents are mortgage brokers in all but name and registration. In some contracts they are even authorized to open bank trust accounts.

  • James Shinners on 2013-04-12 9:16:07 AM

    I'd rather not have all bank mortgage specialists become mortgage brokers.

  • Confussed on 2013-04-12 9:16:33 AM

    This article was hard to professionals, mortgage brokers and mortgage specialists - all seem to be interchangeable within this article. Perhaps defining each would clear things up.

  • Brian Matthey on 2013-04-12 9:44:45 AM

    The banks will continue to lobby hard for exclusion under the act.If a consumer were ever to obtain a copy of the guidelines under which we operate and specifically the guidelines as to suitability,affordability,risk tolerance and compensation,they would realize their bank could seldom comply and they would run to the nearest broker.In fact,we should provide a copy to every consumer.

    The educational direction for mortgage brokers in place for protecting the consumers interest would also be a stickler.

    Our government mandated guidelines specifically address doing what is best for the consumer in all aspects with full disclosure.

    The banks are profit centres where the demands of the shareholders outweigh the interest of the client.Nothing wrong with that as they are in the business of making money.

    They dont really want their road warriors operating in any other way.

  • Nick Hamblin on 2013-04-12 9:47:27 AM

    The Mortgage Brokers Association of Atlantic Canada recently had a discussion about this and Janet Mckeough the president of MBAAC bought up the actual definition of employee and the Bank Road reps actually do not meet that definition and should be required to become licensed and meet minimum standards just like brokers! Also they are commissioned and not on any branch payroll and receive limited benefits another indicator that they are not actually " employees"

  • Paul Therien - CENTUM on 2013-04-12 10:14:58 AM

    This is a double edged sword. On one hand having mobile bank reps licensed makes sense as it would level the playing field in terms of educational requirements between bank employees and Brokers. On the other hand, all bank employees are required to undergo AML legislation testing every year, including mobile sales force reps. The reporting criteria to OFSI to ensure that this is being done is extensive. So – will brokers then submit to those same tests annually, and who will be accountable for ensuring that it is done, and that all pass the testing? Also, will broker firms allow themselves to be subject to some of the bank act legislation with regards to “know your customer” rules? Most do comply today, but that is because many of our lenders partners insist on it, not because it is legislated for us to do so.

    We also have to consider that the only way for the bank reps to become regulated is at a federal level and through amendments in the banking act. The provinces have very limited jurisdiction over a federally chartered bank and their employees, in B.C. there was talk of doing it, and that discussion died a pretty quick death. So if we move to federally mandated regulation for bank reps, do we also then consider moving to federally regulating mortgage brokers? Given the wide range of education requirements between provinces, that might not be a bad thing. It may increase the professionalism of our industry.

    I don’t disagree with regulating bank reps, I just think that we all need to have an informed discussion about possible scenarios that could result from that happening. We also need to ask ourselves the question… are we asking that they become regulated to stem competition, or because it is in the best interest of the Canadian consumer? I believe that it is the latter, but to read many of the comments made, and articles about it – to outsiders it appears that it is all about tying the hands of our competition. No government would do it for that reason – so let’s maybe re-think our approach and focus on what would be best for Canadians, THEN let’s lobby for change.

  • Ottawa Agent on 2013-04-12 11:50:10 AM

    I am actually tired of reading articles regarding the bank road warriors, the banks are above the law in Canada and no matter how much we whine about it, nothing will change. The banks and their road warriors will always be there, just do our jobs properly and the clients will make their choice on who to deal with. If you are professional, knowledgable and look after the clients interest first, the clientb will always choose you. I don't need to hear about this anymore, lets move on.

  • Paolo Di Petta | on 2013-04-12 12:29:01 PM

    This relates back heavily to the aricle yesterday where one of the commenters told us to ease off on the Bank attacks. Bottom line, they have massive budgets, and often sweep complaints about poor service and other blunders under the rug with PR tricks.

    They're doing the same thing here with their road reps, hiding behind the Bank Act instead of MBLAA (and other similar acts that govern us brokers/agents). They have the money and connections to lobby the government, where independant brokers don't.

    If CAAMP wanted to be relevant, they would fight for us on this front instead of whining about mortgage rule changes.

  • B.C. Broker on 2013-04-12 12:36:20 PM

    I 100% agree with Paul from Centum. I have never heard anyone have the discussion from any standpoint other than "unfair" that the bank employees are not regulated. Governments don't change laws because people think it is unfair that there is competition. In other industries there are issues because there is not enough competition... and we think that the government will change ours because we think there is too much? REALLY?

  • Jason - Ontario on 2013-04-12 12:41:08 PM

    I agree with you B.C. broker - when is there going to be a discussion from our leadership about what we need to do to ensure that the consumer is best looked after? Too many people are worried about money, and that is very transparent in this call to regulate bank reps.

    There needs to be a discussion about this at an industry leadership level, and so far I am only seeing one person at that level that is actually looking at the whole picture instead of telling brokers what they want to hear. You all know who he is, you can read his comments in this very article.

  • B.C. Broker on 2013-04-12 12:45:29 PM

    Jason - who are you referring to in the article when you say "you can read his comments?" Do you mean in the article itself, or in the discussion section?

  • Rick Lunny on 2013-04-12 1:04:12 PM

    There appears to be some confusion here. Bank reps are regulated federally, under the bank act. They have various compliance processes they must follow. Naturally, like any industry some of their reps are not perfect. Banks have resisted any and all efforts by any provincial body to also regulate them. Hopefully it is clear to all they are not brokers, but employees selling only one company's product. CAAMP represents all mortgage professionals, including bankers. Thus I would not expect them to lobby for one member group over another. In the U.S. the brokers and bankers split their organizations many years ago. It is another discussion on whether that makes sense in Canada or not.

  • Jason - Ontario on 2013-04-12 1:07:52 PM

    Hi B.C. Broker - I meant in the comments section, sorry about that. I was referring to Paul from Centum.

    Rick you have it right, it is a discussion that needs to be had, but the only people at a leadership level I see willing to have that discussion is you and Paul.

    Just saying...

  • Paul - CENTUM on 2013-04-12 1:21:56 PM

    Well, first off thanks for the supportive comments from B.C. Broker and Jason - Ontario. It is nice to know that my feedback sometimes resonates with a few people.

    Rick, Nice to see your name again, it has been a while.

  • Paolo Di Petta | on 2013-04-14 8:49:32 AM

    @Rick - maybe that's part of the problem - CAAMP shouldn't be representing us AND bank employees, especially when we're not governed by the same rules.

  • Paolo Di Petta | on 2013-04-14 8:49:39 AM

    @Rick - maybe that's part of the problem - CAAMP shouldn't be representing us AND bank employees, especially when we're not governed by the same rules.

  • Robert Stanfield, Invis on 2013-04-14 9:39:50 AM

    Based on Rick and Paolo's comments pertaining to seperate governing bodies between brokers and banks, this is long over due.
    Brokers and banks are not the same entity, so they should not be in the same organization together. a huge conflict of interest, which I think CAAMP experiences on a regular basis.

  • risk manager on 2013-04-15 7:46:55 PM

    I would like to add to the excellent comments already posted by Paul Therien and Rick Lunny.

    If you are a mortgage broker and are calling for a "level playing field" does this mean you are also willing to comply with all of the OSFI and AML/FINTRAC guidelines/regulations/legistlation? However much you may like to think otherwise, the Provinces have NO POWER over Federally Regulated institutions such as Banks.

    So please, carefully consider the following questions: 1) Are you willing to accept the fact that you must comply with all of OSFI's B20 guidelines in respect to every mortgage you arrange? 2) Are you willing to subsidize from your commissions the costs associated with setting up the necessary infrastructure to meet the compliance and reporting that is required by these regulatory bodies to ensure you are compliant with their guidelines? 3) Are you willing to accept the potential legal ramifications that you will personally face (including incarceration) for failing to comply with these pieces of legislation?

    If you are not prepared to answer "yes" to each of these questions, please stop complaining about the lack of a "level playing field"!

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions