A Northern Ontario broker is sounding the alarm about what he calls the large number of mortgage agents flying solo in smaller markets, without the benefit of in-house broker guidance. It’s a trend that may chip away at the industry’s bragging rights.
“Since the new regulations in Ontario did away with the requirement to have a licensed broker on site, our market has been flooded with inexperienced agents who are working without the direct and necessary training and guidance of their broker,” Nick Tassone, broker-owner of Midtown Mortgage Service in Sault Ste. Marie, told MortgageBrokerNews.ca. “I know that these people will not survive, but it’s the damage they do along the way that matters.”
Like brokers in other rural and small markets across Ontario – and, indeed, the country – the 21-year industry veteran has watched in frustration as the local brokering landscape changes from a majority broker-owned-and-operated businesses to one marked by individual agents representing brokerages headquartered in major urban centres like Toronto and Vancouver. The Ontario trend started in 2008 with amendments made to the Ontario Mortgage Brokerages, Lenders and Administrators Act, effectively replacing rigid on-site broker requirements with mandatory educational training as part of the agent licensing process.
Ironically, Tassone’s own attempts to place an agent in Thunder Bay before 2008 were thwarted by the old regulations. Even with the way now clear, he’s not prepared to move on those earlier plans.
Trading broker oversight requirements with agent training has come at the cost of local expertise, he said, arguing that FSCO educational components – in the absence of more rigorous testing – have failed to deepen agent skills.
“They’re just not getting the experience and expertise that they need,” Tassone told MortgageBrokerNews.ca. “This business is about more than filling out an application and putting it into the system. Brokers spend more time educating clients than they do taking their information. The function, the reputation of brokers as mortgage experts, is being compromised.”
That bragging point has in many ways been the primary tool for brokers in the Sault and other small cities where banks remain pillars of their tight-knit communities. It means that consumers aren’t as susceptible to appeals based on rate or customer service.
“In this market, we lose clients based on brand – the brand of the banks – rather than on rate,” said Tassone, “having agents that have taken a prep course, but don’t have the experience of a broker right behind them isn’t helping the industry win market share here.”
A brokerage head in another smaller Canadian market – Lethbridge – shares some of those concerns about the possible erosion of expertise, although his market remains dominated by broker-led firms. By Tassone’s calculations, Sault St. Marie, on the other hand, has more than double the number of agents representing out-of-town brokerages than it has broker-run businesses.
“Hopefully in cases where the agent isn’t in the same city with the broker-owner, the broker is performing the necessary due diligence in vetting their applications,” Rick Somerville, owner of Dominion Lending Centres - Advanced Mortgage in Lethbridge, told MortgageBrokerNews.ca.
“It’s up to the broker-owner to keep on top of the documentation. Personally I wouldn’t do it, because you lose that contact with the agent necessary to train and develop them.”