Veteran concerned brokers are being singled out

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FICOM is passing a rule change that will require brokers to explicitly disclose commissions, but what about the other industry players it regulates?

“I see no attempt on FICOM’s part to move ahead with an initiative for full disclosure on the part of credit union road reps they regulate and who work on a variable rate comp. depending on what rate they actually offer the consumer,” John Bargis, principal of Mortgage Edge, told “Perhaps they aren’t so concerned about the perceived conflict to the consumer or the need for disclosure in this case, or perhaps the credit unions just have too much money to fight the fight against any attempt against their front.” has contacted FICOM and is awaiting a response about whether or not it plans on expanding the scope of its upcoming disclosure rule change.

FICOM put forth a new interpretation of regulation Form 10, which will require mortgage documents to state how much brokers are compensated.

Prior to the decision, FICOM collected feedback from industry stakeholders, including brokers. But that comment period was not enough, according to Bargis.

“My advice is that FICOM should spend more time to better understand the potential serious adverse effects their disclosure proposal will have on an industry that actually benefits the consumer all around,” he said. “This is not a decision that should be taken lightly, and needs to be studied in depth with much interaction and consultation with industry wide professionals.”

And, like many in the industry, Bargis remains perplexed by the regulator’s decision.

“Mortgage brokers undoubtedly provide a great service to borrowers, with lower rates than they would typically receive through their lending institutions, with more than favourable pre-payment options, and advice," he said. "So knowing this, what could have possibly led to this endeavour?”
  • Bart Durrant on 2016-04-01 9:43:33 AM

    The consumer already benefits from our services so look at who doesn' t benefit from our services and that would be the banks. Perhaps a senior banker dropped the idea off over lunch.

  • Ross Taylor on 2016-04-01 10:11:50 AM

    Over the years I have learned it's almost impossible to win an argument when the bureaucrats flex their muscles. The FICOM decision simply reinforces that point of view.
    I don't really mind if I have to disclose my compensation, since I do not think it will adversely affect my income or the client relationship.
    In fact if we want to highlight the inequities between us and FI's like banks and credit unions, this might not even make my top three issues.
    Having said that, in many cases, I truly do not know how much comp I will make on a deal - it will be what it will be. And the calculation of net profit on any given deal is far more complex. Why just pick one of many possible measures?
    Do I have status and what level of status? Will I earn an efficiency bonus or volume bonus; is there a trailer fee component? Am I co-brokering with someone on a different comp plan from me?
    Am I going to pay a referral fee? Or how about thank you gifts to the client and our referral sources. And support staff – these are all costs of sales and affect how much profit we make.
    Arguably it maybe more relevant to the client to know I am paying a referral fee to his financial planner or realtor than how much gross commission I might make.
    I find it hard enough keeping up with product and lender guideline differentiators, and do not want to spend time learning how much each lender pays for each product and underwriting scenario.
    Our splits all vary too.
    Some of us are brokers and some are agents. Some are franchise owners. Some of us have substantial overhead and others are lean and mean.
    Gross commissions are not an accurate measure of how profitable our businesses are. It is just one of many numbers floating around.

    Why not have a brand new stand-alone disclosure document for clients that states in very clear plain English how much a possible prepayment penalty might be for the mortgage they have selected. This is far more pertinent information to the unsuspecting public.

  • Drew Charles Donaldson on 2016-04-01 11:25:26 AM

    No problem and we will make our compensation calculation as complex as the Big Banks make their penalty calculation which apparently Regulators believe is transparent and in the Consumers best interest for years.

  • Victor Simone on 2016-04-01 12:48:19 PM

    Mr. Taylor; After reading your sensible response, I have accepted the outcome and will just move on. FICOM isn't the first ruling organization to make unpopular laws, and and they won't be the last.

    Banks win again, and the consumers and independent brokers lose.

  • deb on 2016-04-04 12:01:01 AM

    If we are to provide and disclose commissions then the same should be asked of the BIG BANKS and mobile sales forces they employ to sell mortgage products. I recently had dinner with a Banker who is thrilled at this news. Why? They know this will form part of their discussions to their advantage by using this as leverage in discussions with clients because they cannot compete with rates we can offer or the service. This does NOT help the clients at all and not all agents will make the same net amount as compensation is different due to volume bonus etc and expenses. The BIG BANKS should really share or have an ON-LINE calculator for their clients to determine their penalties at any given time. Perhaps they should also explain the difference between a collateral mortgage and limitations that come with it. I believe that these mobile forces and any sales staff in the Bank/branches should have to understand the industry and be qualified to have mortgage conversations with customers meaning they have an industry standard testing like we do. If you asked the average Banker about IRD they would tell you that they are all calculated the same and we know they are not. These staff are protected by Banks but many many clients are misinformed about the products they have and where a collateral charge is put in place they do NOT know the difference when it comes to IRD penalties and how they are calculated. This is far more important then having to disclose what we are paid. I just recently purchased a vehicle and I don't know what the sales person was paid!

  • Dave on 2016-04-04 8:40:18 AM

    Glad im not a broker in BC....this is a disgrace how the banks have power over FICOM...

    They are the reason this doubt about it ...meanwhile , the IRD penalty is still the biggest scam going ....

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