Brokers complaints hit Better Business Bureau

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The country’s largest Better Business Bureau saw the number of consumer complaints against brokers more than triple over the last three years – at the same time industry membership, in fact, dropped.

The actual numbers may be less impressive, but client beefs lodged at the BBB of Mid-Western & Central Ontario went from 0 in 2007 to 10 last year. With two months left on this year’s clock, brokers have already faced a collective nine complainants, leveling charges that run the gamut from rate misrepresentation to cancelled deals and penalty disputes. The exact resolution of those complaints is unknown.

The growth in formal complaints stands in stark contrast to falling broker membershi, which was once considered a must for mortgage professionals before Ontario moved to directly regulate their industry in 2008. Member drops largely coincide with the commencement of provincial oversight.

Again according to Mid-Western & Central Ontario data, membership numbers stood at 17 brokerages/brokers in 2010, down nearly 23 per cent from the 22 mortgage businesses on the organization's books in 2008. It has since bumped up that number to 19, a figure still representing only a fraction of Ontario’s broker membership in the 1990s.

Falling numbers or not, the Ontario BBB has had more complaints to grapple with.

“The complaints … were followed through by the BBB," Fiona Dunbar, dispute resolution supervisor.  “We do on occasion refer consumers to the Financial Services Commission as well."

Provincial regulators and insurers are also dealing with a growing number of complaints against brokers as housing markets across the country cool and new mortgage rules increase the difficulty of getting some mortgage deals approved. Lawsuits around private lending deals – more often brought by investors – have also led to a spike in E&O insurance claims.

The industry saw a spate of broker suspensions and cease and desist orders this summer, with regulators showing renewed willingness to enforce both the letter and the spirit of the law. The associated consumer dispute mechanism has helped erode broker membership in BBBs across Canada, making similar services at those member-organizations redundant, argue some industry players.

But tighter regulations haven’t culled complaints.

In the province of Alberta, alone, RECA – The Real Estate Council of Alberta – censured more than 10 mortgage professionals between mid-May and mid-September, citing an array of offenses, from refusing to cooperate with an investigation to failing to comply with licensing conditions.

In the last seven months, British Columbia has doubled the number of cease and desist/suspension orders for mortgage professionals handed out last year. Regulator FICOM has also reached settlements with more than 10 brokers since last year, on disclosure, jurisdiction breaches and other key areas.

Its counterpart in Ontario, FSCO, has also issued several cease and desist orders since April of this this year.

The collective action comes as officials at the Manitoba Securities Commission blast brokerages now operating outside the province’s new licensing requirements with correspondence demanding their compliance.

“The Commission has jurisdiction under the legislation to prosecute a business or individual which conducts mortgage broker activity without being registered and will exercise this authority when required,” Ainsley Cunningham, manager of education and communications at the commission, told MortgageBrokerNews.c. “Staff are also sending letters to businesses and individuals who in the past may have been doing mortgage broker activity to make them aware of the requirement to register, and provide them with an opportunity to send in an application for registration.”

While membership in Canadian BBBs remain voluntary, some brokers remain committed to keeping that less-combative avenue of dispute resolution open to their clients. Arguably, it's also a way of keeping small beefs from escalating and eventually landing on the desk of provincial regulators.

  • Ontario Broker on 2011-11-04 2:25:49 AM

    What a self-serving marketing ploy for BBB!
    10,000 + brokers-agents in Ontario with10 complaints. Zero would be best but is that realistic. BBB is a dinasour. We have a real regulator, don't need to pay the likes of BBB.

  • BBB NOT USELESS on 2011-11-04 3:21:57 AM

    Wow Ontario Broker - you just don't get it... the Better Business Bureau is something that should be supported, and encouraged as it provides an opportunity for dispute mediation without the excessive costs of lawyers, etc. It is also a great tool for businesses to advertise that they are members, and that assists in driving consumer confidence in your business. The regulators are not there to defend you or look at a complaint objectively as the BBB is.

  • Jeremy on 2011-11-04 3:39:28 AM

    CAAMP can learn from this. You can't teach ethics, so stop trying!! You either have it or you don't, PERIOD!

    Now of those complaints, how many were newbies? How many were AMPs? How many worked part-time in our industry?

    On with the mortgage revolution!

  • Same Old on 2011-11-04 6:14:47 AM

    Not only 10,000 brokers but arranging literally hundreds of thousands of mortgages. "TRIPLED in three years" is the headlines. No where does it report the severity of the complaints and if in fact all were substantiated. I would like to see the number of complaints against Banks during the same period.

  • Julia Krause on 2011-11-05 4:01:00 AM

    So now we have MORE mortgage brokers than ever in the business, yet our market share is DECREASING, and complaints are INCREASING. Hmmm...

    I believe that ethics in this business can be taught... I believe that everything you need to know to be a good mortgage broker can be taught. The problem is that no one is teaching it!

  • John Dearin on 2011-11-04 9:54:00 PM

    I have found the BBB useless and have withdrawn my companies membership. They did nothing down this way. I provide all my clients with information on how to file a complaint with our provincial regulator (I use the word regulator very sarcastically here) as well as the address to CAAMP. I am hoping that CAAMP will get more aggressive in "firing" brokers and agents that do not follow all the rules, and publish this information at least locally. And hopefully the provincial regulators will get the nerve to haul a few into court. The faster these guys get rid of the sleaze in this industry, the better it will be for the honest ones.

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