Proposed federal legislation – if passed – could widen the broker channel for mortgage professionals now facing a shrinking number of deep-pocketed lenders.
Regulations for Bill C-9 were published yesterday and would pave the way for cross-provincial expansion of regional credit unions. Currently, those lenders form a fragmented network of players limited to their respective home turfs and ultimately blocked from becoming full-fledged lenders in the broker channel.
The bill would allow provincial credit unions to become federal entities, and ultimately accept deals from across the country and not just their traditional territories.
That’s good news for brokers, who have traditional been used by credit unions to break into new markets where they have little to no name recognition. It would also remove one of the biggest broker beefs about unions, specifically, the lack of availability for all clients, regardless of their location.
Some of the country’s biggest unions are already applauding the legislation, which must still win Parliamentary approval.
"At Meridian, we believe that allowing credit unions to expand their businesses outside of provincial borders is a very positive move for the Canadian credit union system, and the co-operative movement overall," said Sean Jackson, president and CEO. "Meridian's proven track record of strong organic growth in Ontario combined with two successful mergers since 2005, has positioned us for success when Bill C-9 takes effect.”
Under the Bank Act, the legislation would deem federal credit unions “banks” that conduct business on a co-operative basis.
Those institutions argue that cooperative approach leads to the kind of increased client satisfaction brokers also focus on. Mortgage professionals largely agree with the assertion, although competitive rates, especially in Vancouver, have also cemented their interest.
Any move by credit unions to better use mortgage brokers in their expansion push would likely compensate for the departure of big bank names, with CIBC’s FirstLine the latest to exit the channel.