Details around commission disclosure revealed

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FICOM has confirmed it will require brokers to reveal compensation details to clients, but has yet to confirm an implementation date.
“We are actively consulting with MBABC, CAAMP and directly with leaders in the BC mortgage broker community on implementation,” Chris Carter, Deputy Registrar of Mortgage Brokers at FICOM, wrote in an email to “We are mindful that industry members may need to make adjustments to respond to the new requirements.
“Given these ongoing consultations, it would be premature to identify a precise implementation date at this stage.”
The regulation change, which was first hinted at in a MBRCC bulletin, has been met with great protestation from brokers who argue such disclosure is unnecessary. Many have pointed to the fact that brokers are not compensated by the borrower as an argument against disclosing to clients those fees paid by lenders.
“ … There is no benefit to the consumer. No one knows how much the dentist that fixes your teeth makes, the salesman that sells you the TV makes, the lawyer who completes your purchase makes – they only know what it costs them,” one commenter wrote on “Clients should be advised when they are being charged fees or when the rate they get relates directly to the compensation received, otherwise it's not relevant.”
FICOM also provided details on what sort of compensation brokers will soon have to disclose to clients.
“The law in British Columbia requires that brokers describe to the borrower any direct or indirect interests the broker, or a related party, has or may acquire in the transaction,” Carter said. “Improved conflict of interest disclosure will include a requirement that brokers disclose the amount of compensation they receive from lenders, including base compensation, volume bonuses, and other rewards. 
“It will also require disclosure of compensation paid to another broker in co-brokering situations.”
  • Bill on 2015-10-23 10:47:35 AM


    The pendulum is swinging too far.

  • Kenzie MacDermid on 2015-10-23 10:47:43 AM

    So are the big banks going to provide their employee salary information plus commissions for their mobile mortgage sales forces...
    This is beyond ridiculous and in my opinion is moving towards the destruction of the brokerage business in Canada, just like the model they used to kill the industry in Australia

  • Dave on 2015-10-23 10:52:19 AM

    Absolutely unnecessary disclosure that consumers don't need. If they're not paying broker fees then they don't need commissions disclosed. Period. CAAMP, IMBA, Brokers, etc. better fight this nonsense. Do the banks disclose every dollar they're making in profit on a mortgage. NO.

  • Jason Breau on 2015-10-23 10:53:59 AM

    It would seem to me a move pressured by the big banks otherwise it does not really make sense to me. What would be next disclosing three examples of different lender offers including what we would have been paid on each to show the client they received the best deal? In the hope of fairness across the board do the bank road reps and in office sales have to disclose salary, bonus and potential sales contest winnings? That would be the fair way of implementing the rule but I doubt that will be the case. Curious if any other business out there is required to disclose this info?

  • welbanks on 2015-10-23 10:58:27 AM

    I hope this means that the banks will also have to comply and have their commissioned sales force disclose their compensation, and disclose the points they are paying to the realtors. I guarantee you now that they don't disclose this info to a client.

  • George Dannewald on 2015-10-23 11:04:58 AM

    Ans how many of us really know up front in order to tell the client "the amount of compensation they receive from lenders, including base compensation, volume bonuses, and other rewards. "
    Oh I know, we write the client a letter when we hit a target and get the bonus! They all know that we are paid by the lender, and apparently don't mind or care how much as they only want a good deal.

  • Jordi on 2015-10-23 11:11:49 AM

    I agree with Jason Breau, this is not ficom making this decision on their own. This is them being pressured by outside forces (banks, credit unions?)

    With that being said it sounds like its coming, so maybe its time to share a script on how to disclose this for brokers across BC. Ie. "Here is the amount that the brokerage I work for gets paid. After their fees are deducted, as well as the fees for operating my business such as credit bureaus, they pay me the remainder".

    I feel that even though its not ideal it is not going to hurt that much. Just remember its not coming out of the clients pockets so they will not be as concerned as if it were realtor fees.

  • Matt L on 2015-10-23 11:15:37 AM

    In my opinion there is nothing wrong with having to disclose your compensation. You can't only give full disclosure when it is good for you. We always state that we are more professional than the bank reps then what have we got to hide?

  • JP on 2015-10-23 11:16:12 AM

    Jason, don't feel this is only mortgage brokers. I urge you to check out CRM2, which relates to transparency in the investment world... "Effective July 15, 2016, investment brokers and dealers will be required to provide two new annual documents. One is an account-performance report, summarizing how investors did over various standard measurement periods. This report will require calculation of money-weighted rates of return, customized according to when new money was deposited or taken out of the account.

    The other new required report, as of July 2016, will disclose fees and other charges. This report will itemize the cost of everything from embedded trailer-fee commissions, to redemption fees, point-of-sale commissions, switching fees and RRSP administration fees, and provide an aggregate dollar figure for the 12-month period." from Morningstar By Rudy Luukko | 20/10/14

  • Dave on 2015-10-23 11:20:48 AM

    @Matt , Nothing wrong huh? I guess you enjoy losing money? Because that is what will happen when your client asks you to pay his/her legal fees, appraisal, etc. after seeing your commissions.

  • Bart Durrant on 2015-10-23 11:23:09 AM

    Disclosure should only go so far. Does a car salesman tell you what they make, does a sales rep at the Brick or Leons tell you what they make, does an investment dealer tell you what they make on your purchase or sale and their advice in lots of cases costs the investor. What we make on our transaction is our business and ours alone. Maybe the party who thinks this is a good idea should tell everyone what they make. Why not have everybody who earns a buck disclose and then we wouldn't have to put up with this nonsense

  • Bert on 2015-10-23 11:27:53 AM

    Matt L - full disclosure is one matter - as it "pertains to the client". This is going to create a scenario - in the mind of some borrowers- that if they avoided going to a broker, then that sales commission wouldn't be paid out and therefore those savings would flow down to them. How long do you think its going to take the folks sitting at the bank branches to figure this one out? Whether its fact or not won't matter. "skip the middleman (and save $$) and come straight to the bank.

  • Mark on 2015-10-23 11:43:56 AM

    The insurance industry in Canada is also commission-based and brokers there can make significantly greater compensation on individual transactions than do many Mortgage brokers. Incentives, especially trips and volume bonuses, are widespread and greatly influence where insurance brokers send their business. There is no requirement for disclosure to the customer, except certain provinces require the broker to provide a single page to the customer stating that the broker will obtain compensation from the policy-issuing company without mentioning amounts or percentages. The insurance industry has successfully fought-off attempts for greater mandatory disclosure.

  • Rayanne Soderberg on 2015-10-23 11:44:35 AM

    This sounds rather like a breach of OUR privacy! Is it not sufficient that we disclose that we are being compensated by a lender, with potential bonuses or perks?! If an Alternate lender loan is obtained, a commission percentage should be advised up front and the client is usually aware as it can be negotiated. Are you willing to disclose your salary at FICOM? No, because it's no one else's business, as it should be for ours. The structure of the pay, rather than the amount should be the focus of the disclosure.

  • Mark on 2015-10-23 11:44:49 AM

    The insurance industry in Canada is also commission-based and brokers there can make significantly greater compensation on individual transactions than do many Mortgage brokers. Incentives, especially trips and volume bonuses, are widespread and greatly influence where insurance brokers send their business. There is no requirement for disclosure to the customer, except certain provinces require the broker to provide a single page to the customer stating that the broker will obtain compensation from the policy-issuing company without mentioning amounts or percentages. The insurance industry has successfully fought-off attempts for greater mandatory disclosure.

  • DB on 2015-10-23 12:03:20 PM

    Sounds similar to the real estate industry, requiring disclosure of the amount earned and finders fees. Guess what occurs? The clients want a chunk of it occasionally. I don't agree with it in some respects, I get the privacy part, I am seeing the brokerage industry moving towards the real estate industry, but I don't see any banks be forced to (a) require licensing (b) disclosing. Why the double standards when they are doing exactly what mortgage brokers do with the exception, that they don't place it with alternative choice lenders for clients. The Gov't needs to rethink the "privacy" part IMO.

  • Rob Hafer on 2015-10-23 12:20:03 PM

    I find it interesting that the legislation didn't change and it is merely Ficom wanting to make this change. So are they saying they have been wrong for the last 15 yrs or so since the Form 10 was introduced? Secondly, if this is to benefit the consumer, are we now going to have to start buying rates down routinely? If not, what is the point of this and if we are, the Banks that fund the monolines won't like that and they could start limiting or even removing buydowns as this could affect the Bank branches and their profitability. Case in point, RMG cut off a very large rate discount site. Seems like a poorly thought out initiative as this could harm the consumer.

  • Jacob on 2015-10-23 1:50:51 PM

    I agree with Jordi, FICOM initiative did not come from no where.
    I also agree with Mark describing the insurance industry.
    What is clear is that mortgage broker associations did nothing

  • Monica Peckford on 2015-10-23 2:00:37 PM

    I agree with Rob Hafer! So they've been wrong for the past 15 years? I think this change will be detrimental for our Industry and we need to collectively stand up against this.

  • Carsten on 2015-10-23 2:02:19 PM

    What about life insurance and financial planners?
    Are they also required to disclose their commission when they sell their products?
    They don't talk to us because they are bureaucrats and not accountable to us.
    If we want awareness of this problem we have to write to our MLA's. They have then to contact FICOM to see what is going on or why they think that there is this great need to do it. We all have to get involved in this.
    MBABC should send out form letters to all of us including a email list of all the MLA's in BC and we should start a public outcry. This is not the first time that FICOM is acting on imaginary problem.

  • sharon burke on 2015-10-23 2:56:23 PM

    If someone asks me what I make I tell them an approx range...I also tell them I have a loan against the building my office is in, I dont have a company pension, I pay my own power bill, internet etc etc....and when I was a banker I had none of those expenses. No one has ever said to me that they felt I was overpaid..... they usually say what do I care if I dont have to pay you..having said that, I don't want to be forced to tell people who don't ask.

  • kac on 2015-10-23 3:32:27 PM

    ficom has gone too far and the MBABC should intervene, ficom is a self funded arm of the provincial govt who know next to nothing about the business they are regulating. Possibly ficom would like to see the whole mortgage broker channel eliminated. wait a second,if that happened i imagine they would all be out of work as they would have nothing to regulate as we all know they really could care a less as to how credit unions etc operate their business's as if there were any issues the credit unions have corporate lawyers and don't easily get preyed on as an independent mortgage broker would. Enough is enough,compensation has nothing to do with regulation.

  • Matt L on 2015-10-23 3:59:24 PM

    I work on the commercial side and we disclose everything. If you look at a realtor they charge sometime 6% to sell your house when you can list it yourself. Even in the car insurance business now they brokers disclose how much commission they make on your policy and that is out of your pocket.
    End of the day if you do a good job for your client and they won't even flinch when you disclose it. The issue is more around brokers that charge fees after stating to their client that is how they get paid then get the finders fee from the bank.

  • Jeff Sparrow - Winnipeg on 2015-10-23 4:06:34 PM

    Unfortunately this is not a new subject and nor will it be the last time the Canadian mortgage brokerage business has to deal with this very serious issue.

    The Provincial regulators continue to look for ways to regulate an industry that they have a very limited understanding of.

    Mortgage originators and brokerages alike are continually painted with the same broad brush strokes by the legislators that financial planners and real estate professionals are, without a full understanding that both of those other respected professions collect fees, in one way or another, from their clients. Mortgage originators do not (in the majority of cases).

    The financial planners are paid through upfront fees, back-end fees, management fees etc. that to most of the general public, are not clearly visible or easily understood. These need to be disclosed so the clients clearly understand what and how they are being charged for the service.

    Everyone is aware that real estate professionals are paid by either the buyer or the seller of the subject property and it is disclosed in the offer forms as a percentage or a dollar amount.

    As mortgage originators we are paid by our suppliers (our lenders). In the majority of cases, at least out here in Manitoba, our clients do not pay for our services. It is a free and very valuable service we provide. We already have disclosure documents that we pour through with our clients that define HOW we are paid and by Whom we are paid as well as the nature of our relationship with the selected lender.

    WHAT we are paid is irrelevant to the client as they are not paying us. As it is irrelevant in every other industry where the client is not paying the sales professional (car business, banker, shop keeper, etc).

    What other industry do you know of that licenses the MINORITY (to quote a good friend of mine in the industry)? As brokers/originators we hold a 20-25% marketshare (depending on your geographic area) as compared to the banks and credit unions. Yet, the banks and credit unions are not subject to the same professional standards that the broker community is held to.

    We have all heard many times from various Provincial regulatory bodies that "these policies are all put in place to protect the general public" and that "licensing is in place to protect the general public". If this is true, then why do they all turn a blind eye to where 80% of the mortgage business is conducted - at the bank and credit union branches in each province?

    Obviously it is because they can't.

    They have no jurisdiction to enforce anything on those institutions as the banks are Federally regulated and the credit unions fall under different legislation.

    So, they turn their attention to the MINORITY.
    Don't get me wrong - I strongly believe in licensing, continuing education and governing bodies. What is amazing to me is that the institutions where the MAJORITY of the general public go for their financial needs - remains the wild west and simply by the vast difference in transactions, must be where the majority of customer issues come up. The exact issues that the Provincial regulators are supposed to be "protecting" us, the naive public, from.

    I'm for licensing of everyone in the mortgage and financial services businesses - let's level the playing field.

    And if full compensation disclosure must be enforced, then I fully expect that every employee in every bank and credit union branch would have their picture posted in plain site in the entrance to the branch and on every ATM, with their salary and bonus structure outlined as well as what their sales targets are and how many creditor insurance policies (that they aren't licensed to sell either!!) they need to get their customers to blindly sign before they get the free trip to Mexico. (after all we are protecting the general public right?)

    This does not make any sense at all and never will.

    Just my two cents...

  • Victor Simone on 2015-10-23 5:24:08 PM

    I would like to know why FICOM has to charge me for an address change.

  • vanislbroker on 2015-10-24 2:21:42 PM

    I want to know all the salaries of FICOM employees

  • Kristin D on 2015-10-25 6:22:55 AM

    Reading what is on the internet, it looks like FICOM does not have answers to simple questions. They cannot point to any consumer complaints about this, any real consultation, or law requiring or even letting them to do this. Whose regulating the regulator???

  • Ted on 2015-10-25 6:28:22 AM

    What does MBABC say about this? Maybe a members only meeting so we can talk freely.

  • Trevor D on 2015-10-26 1:22:23 PM

    This is the same type of disclosure that financial planners are going through with mutual fund fees. It will mean that we will need to know what our value proposition is and make that clear to the client. It also would bring to light if we got paid more on one product or institution vs. another. I think it is good for the sustainability of our industry long term.

  • Jesse on 2015-10-27 4:50:47 PM

    How do we stop these retards from implementing something so obsurd!!
    In my opinion, we need to start a class action lawsuit against FICOM. They are just doing this to try to make brokers look bad, etc. Definitely this is coming from the super powers behind big government to protect the banks from losing more market shares to mortgage brokers. National mortgage associations need to fight this with everything they got or we can kiss our industry goodbye.

  • Liz on 2015-10-28 12:23:12 PM essentially with all the disclosures required of brokers, this piece of information will become 'buried' somewhere within the pages and pages of disclosure fine print (sound similar to banks?). Beware... next it will be boxers or briefs!!

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