Will FSCO follow FICOM’s lead?

by |
Now that FICOM will soon require brokers to fully disclose commissions to clients, many wondered if other provinces would soon follow suit. We reached out to the Financial Services Commission of Ontario and asked.

FSCO said it would consider implementing similar disclosure requirements for brokers in Ontario.

“FSCO's legislative mandate is to provide regulatory services that protect the public interest and enhance public confidence in the sectors it regulates, including mortgage brokering,” Malon Edwards, a FSCO representative, wrote to MortgageBrokerNews.ca in an email. “In general, FSCO would implement regulations approved by the Ontario government that provide consumers, lenders, and investors with better protection and more information for their mortgage investments.”

When asked in a follow-up whether FSCO has any official plans to change disclosure requirements, Edwards said: “As stated, if the provincial government approved the regulations requiring this disclosure, we would implement them.”

FICOM announced last week it will require brokers to follow a new interpretation of regulation Form 10, which will require mortgage documents to explicitly state how much brokers are compensated.

FSCO said it is aware of FICOM’s disclosure plan and that it follows developments of the broker industry across Canada.

The regulator also clarified what is currently required of Ontario-based brokers when it comes to disclosing commissions.

“While mortgage brokers in Ontario are required to disclose to clients that they receive commissions or bonuses in connection with arranging mortgage transactions, they are not required to disclose the actual dollar amount,” Edwards said.
  • Dave on 2016-04-05 9:05:45 AM

    How about the government starts getting banks to explain their penalties first? This is the question most clients ask , not how much a broker makes on their already low commission deal .

    This industry and its government is so paid off by the banks its hilarious.

  • Barry Patchett on 2016-04-05 9:10:12 AM

    2 quick comments....
    1) Whatever happened to the Privacy Act?
    and
    2) If you implement this for Mortgage Brokers being commissioned sales people are you going to implement this for any other commission sales persons working in Canada, regardless of industry?
    Cheers.

  • George on 2016-04-05 9:25:02 AM

    Very difficult considering we only know then initial commission from each lender but really don't know what bonus $ are until that level is reached nor whether an annual trailer fee survives the full term as borrower could break the mortgage early. There are too many variables to accurately state how many $ we receive in total. And then there are points and Mbucks etc!

  • Rob on 2016-04-05 9:51:34 AM

    Good point George!

  • Bert Czombos on 2016-04-05 11:56:36 AM

    Perhaps CAAMP or whatever they call themselves now should be pushing back on this NOW - not waiting around to see what the actual "wording" of the disclosure requirements are - as they claim to be doing now in BC. To late by that point. This is a privacy issue, an unfair business practice issue - and if I can't walk into a bank (as a customer) and ask the manager how much he / she makes then why should I have to disclose it? The salaries at the bank impact what I pay in service fees ?? So following that logic then everyone who works in the financial services industry impacts consumer cost & thus their salary / commissions and yes bonuses should be made public knowledge.

  • WTFacebook on 2016-04-06 10:08:29 AM

    Meanwhile...on another front....RBC is involved in a possible money laundering scheme as shown by the Panama papers.

    The Gov't and regulators are up in arms and want new regulations.....not. Crickets.....

    I ask again....why is this Ficom head taking such a hardline? Maybe she got burned by a broker? maybe the ex was a broker? maybe her friends are bankers giving her nice xmas presents?

    Vaseline anyone?

  • Keith on 2016-04-06 10:41:39 AM

    And once again brokers come off as not understanding even the basics of their industry or resort to vilifying the banks. The professionalism is staggering... (that would be sarcasm for anyone who missed it.)

    SO many things to comment on...

    FIRST. Actually WTF there is a call for stiffer regulations by the gov't and regulators for the banks. Have you not been reading the news?

    SECOND. This has nothing to do with the privacy act... know why? Because you are being paid a commission by a third party that contracts you to source business for them. You are not being asked to disclosure your SIN#, DOB, banking information, etc etc etc. Tada! No infringement on privacy! Lame argument really... just lame.

    THIRD. Bank managers and employees do not have to disclose their incomes because... wait for it... they are EMPLOYEES. They do NOT tell the consumer that they work for the consumers and not the banks. They do not claim that they only have the customers interests at heart. They do not claim to deliver 100% impartial advice. etc. etc. etc.

    The Lenders DO disclose 100% of the income they earn on EVERY product they sell. It's been the law for them for many many many years.

    YOU Mr./Mrs./Miss./Mz. broker routinely tell the customer that you work for them and not the banks (DLC had a national TV advertising campaign that said exactly that). YOU tell the client that you give them impartial advice.

    You do NOT tell them that you have minimum funding requirements. You do NOT tell them that you get to go on fancy trips or get bigger volume bonus when you send more business to one lender than another.

    You claim to work for the customer and not the bank, but you sign a contract with the lender (some of them... BANKS) to source business for them, and you get PAID to source that business. That means that legally... you WORK FOR THE BANKS. WHY? Because you signed a contract with them and... they PAY you to fulfill that contract.

    Maybe, just maybe, if brokers had not been feeding the consumer half truths all these years, and maybe if some brokers did not charge additional fees to the customer... well maybe all of this would never have happened in the first place.

    Now, for the onslaught of people who deny these truths...

  • Evan on 2016-04-06 10:46:20 AM

    I really do not know what the big deal is. I am OK to disclose to the clients, I have nothing to hide. Most of the brokers I talk to don't really think it is that big a deal either.

    There has to be a reason that some are fighting it so hard. For the life of me I can't figure out how this is going to hurt my business. The banks can try to use it against me, but when I have the same or better rates, better service, and access to more lenders... and the fact that in many cases it is the same banks that pay me who's staff will try to us this against us... their argument is easy to disprove.

    Also, how is it OK for brokers spend all their time bad mouthing the bank reps and their lack of professionalism, but not OK for banks to do the same? If you want to throw mud, you better be prepared to have it tossed back in your face.

    Respect earns respect folks, and this anti bank rhetoric needs to stop...don't forget who backs 80% of the monoline lenders in this country. The very same banks you all seem to think it is OK to publicly slander.

  • Kevin R on 2016-04-10 4:37:05 PM

    Keith: Fine line here. Yes Brokers like to say they represent the Consumer & you are right, considering the Broker agreements being signed make that a conflict. Especially here in Alberta where we have to disclose our role in the transaction before any work even begins.

    Now, not many mortgage agents actually own the company they work for. Hence, they may not earn volume bonuses & definitely dont earn 100% of what is earned on the transaction. Are they employees? If so, why are they having to disclose personal income? Now you say the Banks disclose all their earnings & yes, any publicly traded company discloses earnings, profits & losses in annual reports required by law. Most mortgage brokerages are private companies. That changes this animal into a Privacy Act issue for Private corporations. & that I am sure a good lawyer will challenge in a Supreme Court. Representation is one thing that you have pointed out, but I quite frankly cant see how disclosing mortgage broker income that is a free service, to the benefit of a consumer, is drawing this kind of regulation attention. & dont tell me it affects the cost of funds being borrowed. There are commissioned sales people in many other industries(auto) that are part of the cost of goods sold & not being scrutinized like this. So Keith, if a mortgage agent is a salaried employee of a privately incorporated Brokerage, what is disclosed to the Consumer? The mortgage agents salary? Or do Private Corporations have to provide Financial Statements to every prospective consumer that wants to simply get preapproved & know how much of a mortgage they can qualify for?

    Evan:Give your head a shake. Are you forgetting the Financial Crisis the world endured that lead to Bank failures all around the globe. What was the biggest threat? Liquidity. Banks did not have the money to lend, which is critical to keeping economies going. You think the Banks have so much money falling out of their pockets that they are just giving the Monolines all this money because shucks, they are good guys & they support the Broker channel? Wrong. The Canadian Fed addressed the liquidity back then by providing these funds & just happened to make the Banks custodian of these funds & to ensure these funds are provided to the Monolines. But there is a cost. The relationship lending of the past is long gone. No more common sense. It is strictly Investor regulated & has never been so black & white in all my years as a Broker & Lender. & those Investors are our beloved Banks. Except, they have a big say in how that money is to be lent out. So if you are looking for me to love the Banks, you better look elsewhere.

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions