By Gary Mauris
There has been much discussion recently about the proposed changes to the form 10 by FICOM, British Columbia’s regulator. Many of the industry leaders including Lenders, Originators and Associations have come together to discuss the consequences of these potential changes.
First off, this is not a Commission disclosure issue. We all universally agree that transparency, regulating meaningful disclosure and enforcement are critically important for our Industry and for the public at large.
We believe that FICOM proposed changes to the Form 10 are with their best intentions in mind and these intentions are for consumer protection.
Having said that, we believe that the unintended consequences of their proposed changes could have very negative consequences to all Canadians.
Let me explain. Ottawa has worked hard to support business/industry and is very concerned about monopolies. Our political leaders work very hard to regulate and manage industry so that monopolies cannot dictate and strong arm Canadians, robbing them of competitive pricing, freedom of choice in products and unbiased advice.
Unfortunately we lack unification and conformity in regulations throughout Canada. What that means in this situation is that FICOM does not regulate the banks but does regulate the credit unions and mortgage broker channel, making the playing field uneven.
Imagine this: FICOM continues with this mandate and regulates that all mortgages originated via the mortgage broker channel have to disclose their exact compensation, where the bank staff and their MMSF (and other lenders) do not.
Instantly there becomes a significant advantage to the banks in Canada as their staff and mobile mortgage sales force start advertising and start saying “why would you use a mortgage professional and pay a fee when you can get your mortgage through us and its free?”
Now although the bank’s mobile mortgage sales forces are compensated similarly, and are compensated from the lender as we are, they do not have to disclose their compensation, creating confusion for Canadians and a significant advantage to the banks.
Instantly the Canadian mortgage channel starts shrinking. Our market-share starts constricting and Canadians unaware of the facts have less choice, less competitiveness in pricing and less freedom in their decisions around the most important investment many of them are ever going to make.