Regulators hint at coming rule change

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FICOM will soon implement more rigorous disclosure rules for mortgage broker in British Columbia, according to the MBRCC; much to the confusion of one leading industry player.

“Based on what they’ve written I’m surprised; I’d be interested in knowing what prompted the need for increased disclosure,” Steve Bucher, a B.C.-based broker with Mortgage Intelligence, told “In terms of who should disclose, it should be Realtors regarding … compensation for referral fees and whether they are disclosed to clients.”

Realtor referral fees have been a well-document frustration for brokers.

The Mortgage Broker Regulator’s Council of Canada recently released its autumn newsletter, and in it mentioned FICOM’s plans to change detailed disclosure for mortgage brokers.

“FICOM is preparing to require brokers to provide more detail regarding compensation,” the council said in the newsletter. “The additional information is intended to shed light on the incentives and compensation structures for mortgage brokers.”

Martin Boyle, Policy Manager for MBRCC, couldn’t tell what exactly that more detailed disclosure rule will entail.

“I don’t know,” Boyle said. “What I have in the newsletter is what I know.”

Calls to FICOM have not yet been returned.
  • Carrie S on 2015-10-16 12:59:33 PM

    FICOM needs to understand this is not just about ‘full disclosure is good’ but rather about ensuring the customer can understand the information in the proper context. It should be about the total cost of credit. That's what customer cares about and that's what they want to compare. Its one thing for the regulator to repeatedly make bad decisions, it is quite another for them to make them like they are royal proclamations. Get out of your offices and talk to us.

  • F Carlton on 2015-10-16 1:22:00 PM

    How come no one from FICOM has talked to us about this before deciding it is the way to go. It may keep their government office in business, it will kill our business. They need to check with us why this is the case.

  • Drew C. on 2015-10-16 1:31:36 PM

    Don’t hold your breath on getting a call back from FICOM. They never call back. If you are one of the lucky few, don’t expect them to answer anything other then basic, basic, basic questions like what forms to submit, what button to push on your keyboard to submit an electronic form or the fees for submitting a form. It becomes pretty clear pretty quick that they just don’t have the answers.

  • M.C. Worth on 2015-10-16 1:42:58 PM

    Architect – “It can be built, we’ll find a way.”

    Doctor – “It can be cured, we’ll find the medication.”

    Good Government – “Let’s not piss off the voters, let’s talk to them about the problem and see what solutions are available and get their help in picking the best one.”

    FICOM – “We don’t understand the mortgage brokering process. We don’t even know if the problem we want to fix is a problem. We don’t know if there will be unintended consequences of what we are thinking of doing. Who care’s? - we have the power. Let’s require another form and see what happens.”

  • J Cowan on 2015-10-16 1:45:49 PM

    Yikes! This is bad!!! Hurts brokers. Helps no one. Who thought this would be a great idea?

  • Mark T. on 2015-10-16 2:03:25 PM

    Do clients care about who gets what? Isn’t it just about the APR for them when they are comparing products?

  • Elizabeth B on 2015-10-16 2:06:01 PM

    I haven’t heard anything about fee disclosure being a problem. Does this change fix a problem or just create problems.

  • Ron Butler on 2015-10-16 2:18:27 PM

    There is a movement all over Canada from regulators in all industries to disclose compensation. It will likely spread over time to the point that every regulated industry will be forced to disclose exactly how much money they make on every consumer transaction.

    You will know what your investment advisor makes, what the house insurance guy earns and what our mortgage broker's income is on every file. I don't know that it is necessary but likely it is coming.

  • Peter Dale on 2015-10-18 2:12:31 PM

    But we won't know how much the regulators make,will we?

  • Rob W on 2015-10-18 3:27:18 PM

    Ask anyone how much a mortgage broker gets paid lwt alone how they get paid and you will get a lot of black looks. Ask a person how much a realtor gets paid you will hear about commissions or flat fees and so on. As for realtors getting compensation from mortgage brokers or banks that has to be disclosed in my province before the referral to the purchaser.

  • Rick (Mortgage Mentor) Robertson on 2015-10-18 4:44:57 PM

    Although the BrokerNEWS article above leaves out the detail, the point is that this disclosure is required when there is a Conflict of Interest. The conflict comes about because many brokers advertise, in print or verbally, that they represent the borrowers and/or the borrower's best interest yet are paid by the lender.

    Working on someone's behalf (borrower) but getting paid by the other party to the transaction (lender) is a conflict of interest.

    My understanding of such representation transactions is that if mortgage brokers/agents clearly communicate to the borrower that they are getting paid by, and representing the best interest of the lender, then no conflict is created. Technically, the BC Form 10 would therefore not be required, and neither would the disclosure of revenue.

    To avoid disclosure of our dollars and cents compensation, our industry will need to make some careful and thoughtful changes on how we advertise and represent ourselves to the client/public.

    Hopefully, like M C Worth's doctors and architects, we will find a way to continue being market-wide Brokers, and not just sales agencies for 3 or 4 lenders.

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