Regulators crack down on rogue brokers

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The industry saw a spate of broker suspensions and cease and desist orders this summer, with regulators showing renewed willingness to enforce both the letter and the spirit of the law.

In the province of Alberta, alone, RECA – The Real Estate Council of Alberta – censured more than 10 mortgage professionals between mid-May and mid-September, citing an array of offenses, from refusing to cooperate with an investigation to failing to comply with licensing conditions.

In the last seven months, British Columbia has doubled the number of cease and desist/suspension orders for mortgage professionals handed out last year. Regulator FICOM has also reached settlements with more than 10 brokers since last year, on disclosure, jurisdiction breaches and other key areas.

Its counterpart in Ontario, FSCO has also issued several cease and desist orders since April of this this year.

The collective action comes as officials at the Manitoba Securities Commission blast brokerages now operating outside the province’s new licensing requirements with correspondence demanding their compliance.

“The Commission has jurisdiction under the legislation to prosecute a business or individual which conducts mortgage broker activity without being registered and will exercise this authority when required,” Ainsley Cunningham, manager of education and communications at the commission, told MortgageBrokerNews.c. “Staff are also sending letters to businesses and individuals who in the past may have been doing mortgage broker activity to make them aware of the requirement to register, and provide them with an opportunity to send in an application for registration.”

The threat of prosecution may be more of a promise, as regulators across the country increase their enforcement efforts this year. The group effort is viewed as reaction to a growing number of complaints from borrowers as well as private lenders following the collapse of Canada subprime market in 2008.

The move to mandate errors and omission insurance from Alberta to Ontario has also led to a spike in litigation, charge brokerage heads across those markets.

Still, any growth in regulator vigilance may work to enhance the credibility of the industry, argue proponents of tough regulations and licensing standards.

  • Mark Piers on 2011-09-27 4:10:48 AM

    This is all good and fine and needs to be done, however we represent only 25% - 30% of origination. Who is monitoring the other 70%+ of bank employees, call centers and mobile mortgage reps? They are saying and doing things that we would never get away with.

  • Angela Wong-Liao, Invis Inc on 2011-09-27 4:58:33 AM

    I agree with Mark Piers, FSCO should also have the authority to regulate the bank road reps. In my opinion, all bank road reps should have to register and obtain their license via FSCO, as they should be regulated as strict as the mortgage broker channel. I notice some bank road reps are so loosely regulated by their employer, the banks, and they are able to get deals approved that should not be on the books of the banks.

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