One industry organization has proposed changes to the requirements for broker registration following a supreme court of British Columbia decision that determined an unregistered broker – who collected a $630,000 broker fee -- did not require registration.
“The MBA requires persons who in any one year, earn a $1,000 or more for arranging mortgages for others to obtain mortgage broker registration,” an official release from the Mortgage Brokers Association of BC (MBABC) states. “However, a BC court (AZTA Management Corporation v. Croft Agencies Ltd. 2014 BCSC 1462) recently determined that an unregistered mortgage broker claiming a $630,000 broker fee did not require registration. This is because he was not considered to be in the business of brokering, which is a requirement for enforcement under the MBA.”
As a result, the MBABC has made recommendations to the British Columbia government:
1. So that mortgage brokers who arrange mortgages and earn $1,000 or more in a year require registration, regardless of whether they are considered to be “carrying on business”; and
2. Making it a requirement for mortgage brokers, who wish to collect broker fees from clients, to be registered and enter into a written client agreement which sets out the fee arrangement.
“These proposed changes would help to eradicate the problem of unregistered mortgage broker activity without placing an enforcement burden on the regulator,” the MBABC states. “This is a particularly noteworthy issue at a time when the MBA is being looked at by the government for amendment or replacement.”