Association: Rule change could increase pressure to buydown

Association: Rule change could increase pressure to buydown

Association: Rule change could increase pressure to buydown A rumoured rule change around fee disclosure will eat away at broker commissions and lending options, argues the MBABC.

“The implications are pretty significant because it will pressure brokers to buydown more business,” Samantha Gale, MBABC CEO, told “Because the whole concept is for brokers to disclose and break down commissions, it will put more pressure on them to take lower commissions.”

Not only that, argues Gale, but the big banks could potentially exit the broker channel due to the increased level of competition.

“The banks will move to protect their branches because they won’t be able to compete with the broker bought-down rates,” she said.

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.”

Gale says FICOM has not yet released any information about what the change would actually constitute. is working with FICOM to attain further information.
  • Dave 2015-10-20 10:19:51 AM
    More nonsense my business doesn't need. Like we haven't lost enough commission already over the last few years? Rebate clients legal fees and appraisals too? Any money going to be left for us ? There's absolutely no reason to disclose commissions or incentives to clients in the mortgage industry. If they get a good deal and professional service, thats all they want to know.

    Will the banks disclose their profits on every mortgage too?
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  • Ron Butler 2015-10-20 10:25:24 AM
    Odd that Ms. Gale thinks that banks will suddenly leave the broker channel over bought down rates when it has been going on for 4 years. Also interesting to see she thinks that brokers will feel pressure to buy down rates.

    I see brokers making comments in MBN every week that their clients buy in to the advice and service levels that brokers provide and rate or commissions are not part of the equation.

    If brokers are doing a great job why would there be any issue with the client knowing the broker's compensation?
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  • Gord 2015-10-20 10:48:21 AM
    The notion that the banks wont be able to compete with bought down rates is absurd. I think we all know that this is the banks money, they can drop the rate if they like, as low as they like and (especially if they dont have to pay the broker) it's still profitable for them.

    This is a bad idea, transparency for the sake of transparency. FICOM has received no consumer complaints and yet will provide the channel with another competitive disadvantage. The worst part of it is, if all we do is show our clients the top line, they will believe (in some cases) that is what we get to keep and that we are overpaid. What about splits and expenses?

    Furthermore there is no benefit to the consumer. No one knows how much the dentist that fixes your teeth makes, the salesman that sells you the TV makes, the lawyer who completes your purchase makes - they only know what it costs them. Clients should be advised when they are being charged fees or when the rate they get relates directly to the compensation received, otherwise it's not relevant.

    FICOM, please consider what you are proposing here, it's not in the clients interest, it's not in your licensed members best interest... might be time for some reflection.
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