Under its Mortgage Broker Conflict of Interest Guidelines, FICOM is trying to force networks to disclose all bonuses. But does the regulator have that power?
The answer, at least concerning some of the networks, is no.
“I think what we’ve seen with FICOM is they, from time to time, overreached and you have to remember that FICOM or any regulator can only regulate those who they regulate,” Dave Teixeira, VP of marketing, public relations and communications, told MortgageBrokerNews.ca. “And, in certain cases, they would not be able to regulate the networks because the members are not actually (licensed) brokerages.”
That’s something DLC
has told FICOM, and asked how they plan to enforce the requirement on companies they don’t actually regulate.
Still, FICOM plans to try to extend the requirement – which will be applicable to all BC-based brokers and agents as well – to the networks.
“The Act requires that direct or indirect payments received by related parties be described in the Form 10,” FICOM wrote in its Q&A about the updated disclosure requirements. “The Registrar expects that franchise and network corporate heads will provide information to related mortgage brokers to ensure related mortgage brokers are able to meet the Act’s disclosure requirements.”
If, somehow, networks are forced to disclose to brokers and borrowers bonuses they make on deals, will that be a game changer for the industry?
It depends who you ask.
“At the very top of these large companies, whether it’s DLC
, VERICO, Mortgage Alliance
, or even down to the smaller operations like Axiom, there is always an additional payment from every lender. Some are more open about it, some are more secretive,” Ron Butler
, a broker with Butler Mortgage, said. “Based on the fact that it’s been known about for a long time” means formally disclosing won’t cause major waves.
However, one industry veteran, who spoke with MBN on condition of anonymity, argues some brokers and agents are unaware of volume bonuses given to networks from lenders.
“The brokerage receives volume bonuses from lenders that agents may not be aware of,” the broker said. “Having to disclose these bonuses would create some very difficult conversations.”
The new requirements will be enforced June 30, 2017.
But it seems some clarification is needed before then.