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