Former regulator calls for syndicated mortgage reform

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The former registrar for mortgages in Ontario weighs in on the recent panel study calling for more stringent syndicated mortgage regulation.

“I had that debate years ago with the OSC when they decided syndicated mortgages were not a part of their operation,” William Vasiliou, former the assistant superintendent of financial institutions and registrar under the mortgage brokers act in Ontario, told “I think it’s a good idea. There needs to be more above-board disclosure. I had discussed that back in the ‘80s.”

An independent panel of experts published a report, which was made available to the public Tuesday, arguing syndicated mortgages should be regulated in the same manner as securities.

“The government should require that documents issued to raise capital for syndicated mortgage investments be subject to the same level of regulation as the securities regulator applies to other offering documents used to raise capital in the province,” the report, entitled Review of the Mandates of the Financial Services Commission of Ontario, Financial Services Tribunal, and the Deposit Insurance Corporation of Ontario, said.

And Vasiliou -- who is retired but continues to work as a forensic analyst for financial services cases, included those concerning syndicated mortgages -- agrees.

“I believe that will be the case [and more disclosure will be required]. I think it’s going to be the regulatory body responsible for mortgage brokers,” he said. “I would think the securities commission has the responsibility to oversee them. They’re still a security like any other security. But I think they’d have to work conjointly with the financial services [regulatory] authority.”

Thepanel – which comprise George Cooke, former president and CEO of The Dominion of Canada General Insurance Company, James Daw, former Toronto Star personal finance columnist, and lawyer Lawrence Ritchie – also recommended an independent regulator be established, to be called the Financial Services Regulatory Authority.

The panel recommended the FSRA should address individuals sanctioned by one regulator, who then go on to engage in activities under another.

“We emphasize the need for FSRA to find ways to proactively consider actions and regulatory approaches taken by other regulators to similar or overlapping matters,” the panel said. “For example, where a securities salesperson has been subject to an order effectively barring them from regulated activities by a securities regulator, FSRA should have a duty to consider whether that person should be permitted to continue selling segregated funds or syndicated mortgages.”

And Vasioliou agrees.

“You shouldn’t be allowed to jump from one regulatory body to another after you’ve been sanctioned,” he said.

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