Should mortgage regulators follow OSC’s lead?

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Ontario’s securities regulator has launched a whistle-blower program that offers up to $5 million to for tips that lead to the prosecution of fraudsters; should the mortgage industry develop a similar program?

The answer, as is the case with most regulatory questions, isn’t simple according to one veteran.

“More transparency and more protection for the public is always good; I would support it,” Ron Butler, a broker with Butler Mortgage, told MortgageBrokerNews.ca. “The funny thing about ‘tip lines’ is that they have a spotty history in terms of success.”

The Ontario Securities Commission’s whistle-blower initiative encourages individuals to tip them off of potential instances of fraud, market manipulation, and other unscrupulous activities in the securities industry.

The commission offers up to $5 million for information.

It also offers protection to those who use its program, which is the first of its kind in Canada. 

And while the initiative is a step in the right direction, similar ones have had little success in the past, according to Butler.

“In the USA the biggest and longest lived financial services tip line is at the SEC and although there have been a few notable successes there have been so many more failures,” he said. “The biggest failure was the case of the securities analyst who submitted five separate letters over the course of five years about Bernie Madoff and the certainty he was operated a Ponzi scheme; all the letters were ignored by the SEC because Bernie Madoff was such a well-connected operator.

“So while I endorse tip lines, the problems that regulators have separating false tips from terminated agents or former employees with a grudge from factual tips often makes the success of the tip lines problematic.”
 
  • Carlo on 2016-07-18 9:29:42 AM

    Yes!!!!

  • Steve on 2016-07-18 9:49:52 AM

    Totally should! Any fraud is bad for our industry.

  • Frank on 2016-07-18 1:00:52 PM

    I support it and hope it comes in. I am tired of all the fraud in our industry and that includes the banks who are equally guilty.

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