Exclusive: Open letter to the industry

by |

We believe in meaningful disclosure. We believe these changes will result in unintended consequences such as:

Canadians having less choice, higher pricing, less options in choice of mortgage products and less flexibility in who they choose to deal with.

This creates greater borrower confusion, misunderstanding and distraction from the far more important terms and the conditions of their mortgage.

Distortion of the borrower’s perception of costs.

Borrowers wrongly concluding that it is more expensive to use a mortgage broker than an Institutional lender.

This will disadvantage the broker channel in comparison with lenders who do not have to make a similar disclosure of costs.

Who does this affect?

Most importantly - Hard working Canadian families who are unaware of this uneven playing field, who will immediately have less choice, higher mortgage costs, less competition to the banks and  lack of freedom with their mortgage options.

This will affect every Mortgage professional in Canada and their families. Although this is a BC initiative, FICOM has stated they would like to be leaders in this initiative and hope that other regulators will follow. We support equal regulation inclusive of banks, brokers and other channels - but not ones that have little to no consultation or a clear understanding of the consequences.

Lenders - If you currently do business with the mortgage broker channel this will affect you and all of your staff.

Suppliers, technology, insurers and all others who currently work within our Industry and are supporters of the Mortgage origination channel.

How can the Industry help?

Don’t downplay the significance of this issue. It is not overblown or insignificant. it is a very real challenge that we will have to work through with FICOM to come up with a solution that works for all.

Reach out to MPC (Mortgage Professionals Canada, formerly CAAMP) to let them know you would like to be part of our response.

Reach out to your Network that you are currently licensed under for further direction as all major networks are unified and working together.

Please be very positive in your response and online forums, as it’s important to respect and appreciate the regulators and their position. Rhetoric, rude commentary, indifference and anger works against us and is not representative of this incredible industry and who we are, regardless of your frustration levels.

Good public policy comes from proper consultation with industry, and cannot be rushed in order to ensure consequences are fully understood.

read more > 1 2

  • Daryl on 2015-11-24 10:28:44 AM

    Very good points and hopefully a strong call to action for our industry

  • Victor Simone on 2015-11-24 11:43:09 AM

    I will stand shoulder to shoulder with Mr. Mauris, and I invite anyone in the independent channel to do their level best to have your voices heard. Tell the lender partners, tell your BDM, tell your association. This change by FICOM is a threat to the Independent channel, and I am seriously disappointed in FICOM, since they moved this disclosure issue without any real input or consultation from it's stakeholders.

  • Steve on 2015-11-24 12:02:52 PM

    I think it is alarming to find out how little control we have in driving reform, best practices etc. when it comes to regulation. If you did a broker survey, I am guessing you will find little broker confidence in FICOM to enforce the regulations they already have and the GAP between broker thoughts and ficom thoughts is getting larger. Self regulation is the only way to solve this. I do not see FICOM suddenly becoming aware of the broker perspective or FICOM caring about creating an unfair or uncompetative landscape. That really only leaves self regulation. You have to be prepared to step up.

  • Len T on 2015-11-24 12:10:02 PM

    MBABC has gone the extra mile. Alerted us to the issue. Is taking the lead and risks. Involved BC politicians who have power on this issue, it's a provincial issue even it can domino to the rest of the country. Explained the problem with the change in detail to the Registrar. Asked us what we thought by a Petition for government. Kept the rest of us in the know. CAAMP has been a sideline observer. This is a BC issue in BC's yard. MBABC is the BC association. It is obviously concerned doing something about it. They obviously understand the technical side of things and not just broad ideas of what might be good ... and you think CAAMP is the answer. A subtle slap is still a slap, even if the "rhetoric, rude commentary, indifference and anger" is not said openly. We need to show some polite appreciation for what MBABC has been doing. Let's call a spade a spade. Thank you Gary for adding more light to the issue. Thank you MBABC for everything.

  • Kevin on 2015-11-24 12:56:55 PM

    Is it just me or does this letter sound very much like the comments that were posted by Paul Therien from Centum some time ago?


    Just saying.

  • Rayanne Soderberg on 2015-11-24 1:11:30 PM

    Well said!

  • JD on 2015-11-24 2:57:39 PM

    I agree with Len T. There is a right and a wrong way to address this. MBABC has approached this in a professional and informative manner, asked questions, shared insight and meeting with the appropriate parties in government. They brought this issue to the attention of BC brokers, conducted a survey which garnered over 1600 supporters, and continue to communicate and work on our behalf.

    Though implementation of such a requirement would have a negative impact on our industry, these scare tactics and speculation by Mr. Mauris are an example of how not to proceed.

    I too say "Thank you MBABC."

  • Gary Mauris on 2015-11-24 8:00:50 PM

    Dear Len,
    Great kudo's to MBABC. Samantha has been very proactive and has worked hard thus far. We are not trying to diminish their role, we are merely trying to enhance it. CAAMP (MPC) has a much wider platform,a larger membership base and a larger influence with all Canadian lenders and suppliers. We have asked all the Associations to work together and issue a Industry-wide response inclusive of every Province, not just BC. This is not a "in my backyard argument", this is a Industry wide discussion that has far reaching consequences. JD,The lenders, the suppliers, the network houses, and the Associations are all, for maybe the first time ever, on the same page and we are trying to become unified to solve this challenge. We have hosted large stakeholder meetings and have come up with some solid plans and a clear direction on how to collectively work through these proposed changes. Please understand, these are not scare tactics. This is a plea to get everyone on the same page and to use our collective influence to work thru and solve any issues that may come our way, now or in the future.

  • Brokers United on 2015-11-24 11:26:13 PM

    Once again, each every broker contributes to the slush fund, retain the best lawyer. Establish that we're not simply an organization that will simply roll over. Go try and mandate a huge change down at the waterfront. Good luck...

  • Jerry Quigley on 2015-11-25 8:49:00 AM

    Very well stated, Gary Mauris.
    The more voices, especially well reasoned voices, the better for our industry.

  • Len T on 2015-11-25 12:45:02 PM

    Gary, your response to my comment about the subtle slap delivers a back handed compliment. It did make me chuckle. You compliment MBABC and say that you are not trying to diminish their role but are merely trying to enhance it. I think you meant to talk about appreciating efforts rather than enhancing roles. I don't think they look to others to determine their role. In the very next sentence you attempt to minimize their ability to be effective.

    You really need to step back, read your comments, inform yourself, review who has done what with who to deliver the message polled from all brokers to the right people, and be sincere in what you say. Choice of language is a killer.

    Forgetting that for the moment, you are right that everyone needs to be on the same page. How should we figure out the right page? I say that it get done inclusively by getting input from all brokers, not just from those who get invited to secret, closed meetings. You see, a host can pre-decide the outcome of the meeting by inviting only people who support the host's view. How about a Petition asking for input from all brokers - big and small, urban and rural, old boys and gals, young people, ...? Oh yeah, that been done ... by MBABC. Let's get on the same page but lets all of us figure out the page rather than a few dictate to everyone else what is right and then trying to sell it to us.

    We know who MBABC represents? We know who CAAMP represents? We can get membership lists. Are you able to say who was invited to your meeting and who attended? We can then assess whether the views of your select group could possibly represent all mortgage brokers.

  • Alberta Broker on 2015-11-25 1:21:09 PM

    I received a joint email from AMBA and CAAMP November 9, which says that "FICOM is considering making changes to compensation disclosure standards. Based on our review of the issue here in Alberta, it appears that this is a BC-specific issue at this time". So what gives. Can CAAMP/MPC make up its mind if this is a BC issue or not.

  • Bob on 2015-11-26 9:58:50 AM

    Like it or not mortgage broker commission is a cost to the lender, which in turn is rolled into the mortgage rate. As a consumer I want to know the "FULL" cost of borrowing of my mortgage including broker commission. Brokers are always talking about banks not clearly communicating about collateral mortgages or payout penalties & ten hide behind whats best for the customer. I believe that Financial Advisors should be fee only & that mortgage brokers should also go that way, then we will see which broker survives based solely on the quality of their service/advice

  • Dave on 2015-11-27 10:26:53 AM


    Have you asked your local bank to disclose their profits on a mortgage? Will be an eye opener if they actually do that one day. And yes, banks do not properly disclose or explain collateral charges or IRD penalties. Just ask any of my clients who I refinanced from an existing bank.

    By the way, do you work for a bank ? LOL

  • Paul Therien - CENTUM on 2015-11-27 12:34:11 PM

    Dear Len,

    I would not feel excluded Len, I did not get invited to the closed door meetings either – Which, as a national brand leader, I thought was strange. I do get that CENTUM is not the biggest company in the industry, but we do have a network of 2400 agents across Canada and over 200 locations – and growing with over a dozen new locations opened in the last 6 months. Apparently however our input was not considered valid and as such we were not invited to any of the meetings.

    What I can tell you is that MBABC and CMBA contacted me the day the ball dropped on this legislation and we have been working with them. As an organization CENTUM has sent letters, and engaged with, the appropriate people at the regulator and the government to discuss this change and the impact it will have on our industry. We continue to lobby against this change and actively engage with MBABC.

    We are working with the regulator to better understand the thought process behind this change. It would appear that there is concern that mortgages are being placed inappropriately. Namely due to the amount a broker earns on the deal, as opposed to doing what is best for the client. There is also some concern with regards to additional fees being charged, and that brokers make the public claim “we work for you, not the banks” (which by definition is technically not true as legally we work for the party that pays us – A grey area in my opinion given the nature of the client-broker relationship).

    That being said however, CENTUM feels – and has communicated to the regulator – that these concerns are valid, but that this change will not resolve these issues. By disclosing the amount earned on a mortgage we are not giving the consumer comparative information, and therefore they cannot appropriately make an assessment. Furthermore, many deep discount mortgages pay less to the broker true, but they are also highly restrictive and outside of low rate offer very little benefit to the consumer. Sometimes cheap is not always better, and we believe that the vast majority of brokers work diligently to assist the consumer make an informed decision about the product that they are choosing.

    We have, after a careful review of the situation, also proposed that there may be other options available to address these concerns and have offered to work with MBABC and the regulator to explore them. We are committed to always protecting our industry while insuring that we also protect the consumer and balance both with the interests of our lender partners.

  • Bruce on 2015-11-27 3:13:53 PM

    Bob is a consumer? And did you know that Pink Elephants can fly!
    Bob is one of those bank employees that like to sneak in to forums like this and give his uneducated opinion about nothing that would ever affect him and of which he knows nothing about.
    Thanks Bob!
    Let me guess, Bob works for one of those three major banks that do not work with Real Mortgage Professionals. Some Mortgage specialists are no more than glorified order takers that work without being licensed in any Province across this country and hide behind big corporate daddy. Hey Bob come work for a Brokerage House and let us see how well you would do without your Corporate Business Card.
    Bob must be having a hard time of it.
    Poor Bob!

  • Croft Axsen on 2015-11-29 4:50:28 AM

    A let me walk in your shoes kind of thought, I wonder what would happen, if regulators lived in a competitive environment and brokers could choose their regulators. And would it be lovely if the regulators had to disclose their incomes. And then brokers could enjoy the regulators discomfort as brokers chose the lowest salaried regulatory. Or even better yet, what if the all the regulators had to bid for each hour of work, and each broker could select which regulator from which jurisdiction got to be paid each day. What if the brokers could say I want the BC regulator today, or I want the Alberta regulator today, or I want the Katmandu regulator today because the Katmandu regulator will work for $10 per day, brokers dictate that regulators disclose their income and after they have spent their day regulating they might not get paid because the broker could choose a different regulator. Another idle thought how about the pension fund that buys the mortgage disclose the wages of all their employees on a pro-rated basis per $1000 of mortgage, then the consumer could try and pick a lender based upon the employee costs of the pension fund buying up the mortgages. Eventually more transparency about costs at the pension funds might lead to lower interest rates. That is not a good analogy for an agency commissioned sales person being forced to disclose income but what the heck just about as useful and just about as absurd. Personal Disclosure, I am a mortgage broker, my personal livelihood will be affected my Ficom's new disclosure rules, most likely negatively.

  • Debbie on 2015-11-29 2:50:29 PM

    Really? we need to start flinging mud at each other? Are we all working for the same results? Please, focus your efforts at the problem, not at who is taking more credit or deemed to be working harder on it. There is almost an undertone of jealousy in some of the comments. Big or small (Brokers), the results of this issue will effect everyone.

  • Betty on 2015-11-29 5:45:44 PM

    Good points Len. If we want to be an industry with one voice, then we need to be respectful of each other. No brokerage, Gary's or anybody else's, has the right to try to speak for everybody. From what I have seen, MBABC is doing the job just fine without individual brokerages adding noise. CENTUM's approach of going through MBABC will be more productive than individual brokerages getting involved. When individual brokerages get involved, our industry is set up to be divided and conquered.

  • James on 2015-11-30 12:07:16 PM

    @ Debbie, I think you are correct - that everyone needs to work together and stop slinging mud. I also think that part of the commentary is because Gary Mauris sees to think that he is the spokesperson for our industry.

    I'm not sure if your comments include the post from Paul at Centum, but I don't think that they should. He makes a valid point. Why would there be meetings about this change and not include him or Centum? I've met Paul a couple of times and I am surprised that someone would discount him in this.

  • Mortgage Lender on 2015-11-30 2:30:11 PM

    Paul is the only one to address this correctly – that there is an issue of concern that mortgages are being placed inappropriately, and that the amount being paid to a broker sways their decision, and that by definition brokers work for the party who is paying them. You may think you’re working for the client, intend to work for the client, but ultimately in the eyes of the regulator your relationship with the lender whereby they’re paying you means that you’re ultimately working for the lender on the transaction and therefore cannot hold yourselves out to be unbiased.

    The argument has always been brought up that banks don’t disclose how much they’re making – this is completely irrelevant. Banks have never held themselves out to be working for the best interest of their client. If you want to know how much a bank makes, look at the financial statements. For that matter, as a lender, we’re exonerated from this as well as we have never held ourselves out to be nothing more than for-profit entities in a competitive market. On the note of the bank’s sales forces disclosing how much they make – they don’t need to as they aren’t representing anyone other than the bank they’re working for and have no claims to be independent.
    As someone who has worked in the industry for years on the lending side in various roles as a BDM/Underwriter/Executive of the lender I work for, we have seen the following types of transactions occur on a regular basis where the broker gets paid more for the transaction than simply doing what’s best for the client:

    - Moving the client to another lender to get paid, at the clients expense (where rate is same or similar)

    - Refinancing the client into a lower rate where the net savings to the client after paying penalties, legal fees, etc. is null

    - Refinancing instead of ETO (where the ETO would work better for the client)

    I think in many of these situations the client would not take the deal if they knew the incentives the broker was receiving to move the file – they may question the need to refinance or move lenders in this situation instead. This is not representative of the entire industry, but there are bad apples in the industry who are self-serving and this is what’s coming down as a result of that, in addition to the issues mentioned above. If you’re afraid of telling clients how much you’re getting paid, you have no confidence in your ability to sell the value in your business (and quite possibly think you’re getting paid too much). Clients expect that you’re paid for your services and understand that going into the relationship. I don’t see Realtors having issues charging what they charge (even though most agree that their compensation structure is outdated and rich given current home prices).

    Sure – tell me that this is “bad for business” and brokers will just race to the bottom – if that was the case there would be a few more True North’s and Butler Mortgages out there, but that’s not the case. Maybe read the Wikipedia article that explains what “brokering” is and quit arguing that the “banks should have to disclose what they make” because they aren’t don’t need to. And lastly, quit accusing anyone who has a shred of an opinion that opposes your views as “working for a bank”. At the end of the day, people will need mortgages and if the broker network disappears don’t kid yourself - we monolines are well positioned to fill the void before the banks do (and some have started making direct-to-market plans already).

  • Keith on 2015-11-30 2:49:43 PM

    @Mortgage Lender

    You hit the nail on the head, and I agree with you - Paul seems to be the only person who is addressing this properly.

    Instead of all these hot shots looking at the 'why' behind the change and then working to find a solution, they are just going to rage against the change, and use fear mongering as a way to get the support they need to be the 'leader' in the campaign against the change.

    Then we have one person who has looked at the issue from different perspectives and asked the right questions: "Why is the regulator looking at this? What do they hope to achieve? What can we do as an industry to resolve this and still satisfy the regulators mandate to protect the consumer?"

    Has anyone, other than MBABC, actually approached Paul and asked him what his thoughts are? He made a comment: "there may be other options available to address these concerns" - I for one would be very interested to have a dialogue about just that - what are the other options?

    I would wager that if we, as an industry, approached the regualtor and instead of saying "you can't do this" and said "We understand why you want to do this, and we support the goal, but we think that there may be better options, such as ____ and ____."

    I nominate Paul and MBABC to spearhead this. Maybe we might actually get somewhere.

  • James on 2015-11-30 3:03:15 PM

    Mortgage Lender has made a good point... brokers who send a refi to a new lender because they get paid full commission is a big problem in our industry. Most of those deals could be done by the same lender. Unless there is a huge difference between rates, or the existing lender declines it there is no reason at all for a broker to do that.

    I also agree with Keith's comments.

  • Frank on 2015-12-01 10:36:20 AM

    Thanks Len T., you're right. We need to all have a voice. No one should appoint themself as the speaker for the whole industry. I agree with others that MBABC has the right approach and message and is actually doing stuff. Paul seems to make sense and to be working with MBABC. This is a good example of when other organizations need to think whether they are adding to the problem, adding to the solution, or just talking for the sake of making noise.

  • John Greenlee on 2015-12-01 11:00:46 AM

    Fascinating debate for sure.

    I mentioned in a comment on Canadian Mortgage Trends that I disclose my compensation to the borrowers with each transaction. My main concern with what is happening in BC is the potential requirement to disclose income that may or may not happen, which could actually confuse borrowers (I am in Ontario) and the ripple effect that may have. It remains to be seen how this will have an affect the industry and it is simply speculation to say it will be doom and gloom.

    That being said, I find through the transparency of giving borrowers the information on compensation that most are okay with it. Sometimes I even get asked "That's all they pay you?"

    Borrowers, tend to understand that we do get paid by the banks/lenders, they also tend to understand that lenders make money on the back end and they also usually recognize the value of working with me as a broker since they typically get a lower rate than their bank offers. I like to give borrowers choice, where there is a choice, to be made on terms and conditions, rate etc. that way they understand the ramifications of the product they are choosing.

    At the end of the day as a broker/agent we should be acting in the best interests of the client and I believe that if we as brokers/agents aren't doing deals in such a manner, then we won't have to disclose our income to anyone.

  • Carol on 2015-12-02 3:30:26 PM

    Have 2 things to comment on.

    1. I like the commentary and the thoughts but I think the people who are going negative shouldn't, it does not contribute anything constructive.

    2. I get it might look like a Paul love fest, but I am really impressed with his comments and how thoughtful he has been. Not just with this but with how he approaches most things. The guy is a really good example of leadership at its best. I met him at caamp this year and really liked what he had to say. I think some others in the industry could take some lessons from him.

  • Barb on 2015-12-08 8:26:40 AM

    why shouldn't the banks also have to disclose what they make on a mortgage transaction? Bank staff have "revenue targets", and also have the ability to discount rates. However if they provide rates that are too low, they don't hit their monthly revenue targets, and don't receive annual bonuses or expense paid trips. Shouldn't the public be aware that they too can lower rates, but don't, due to personal gain?

  • just looking on 2015-12-08 9:51:53 AM

    I think some peaple are missing the point here. These changes have more to do with the agency principal which applies to any independant professional hired to act in their clients best interests. Clients must be assured that their broker is not primarily influenced by compensation or incentives to sell a specific product without putting their clients interests first over their own. That being said, most brokers do put their clients interests first. Bank reps are employees of the bank and are not independant. They have targets to push certain products, are given incentives to motivate them to sell specific products etc... Basically they are paid to put the banks interest over the client's. When a client chooses to deal with the bank directly they run the risk of being sold a product that does not put their needs first (think IRD calculation). Brokers need not be afraid of compensation disclosure so long as your services provide full value, your client is well taken care of, and fully understands what you are recommending. At the end of the day you can look at this as an advantage for brokers or bank reps. Most intelligent people will choose value, transparency, and service over price so in my book brokers win. Those that choose price over all else do so at their own peril and probably end up going back to their broker anyway.

  • keith on 2015-12-08 12:17:56 PM

    @Barb and others commenting about the Banks.

    Bank reps do not need to disclose their income because they do not make the claim that they work for the consumer and not the banks. The consumer is well aware of the fact that they are bank employees.

    The banks also fully disclose their earnings on a mortgage, it's called a disclosure document.

    Brokers need to stop whining about the banks and how "unfair" it is that the same rules don't apply. They don't apply because they are DIFFERENT. They sell one brand of product, for their employer. The do not hold themselves out as independent, they are openly selling their employers product. Everyone in Canada knows that the banks are for profit companies, if you don't you have been living under a rock for the past 200+ years.

    Brokers need to also stop claiming that they are fully independent, or work in the clients best interests. You get paid paid by the lender - full stop. A brokers job is to find a mortgage for the customer - YES TRUE. A brokers job is ALSO to source business for their lender partners. Lenders like Scotia have minimum volume requirements, and provide incentives for you to send your business there.

    Get over it.

    I saw a comment here about DLC the other day, now it is gone. Was their some truth to it? Have to wonder now.

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