Mortgage associations present recommendations to regulators

Mortgage associations present recommendations to regulators

Mortgage associations present recommendations to regulators

B.C.’s broker association has now formally presented recommendations to the Regulator's Council of Canada explicitly calling for bank representatives to fall under the same regulations as mortgage brokers.

“Imposing boundaries on the conduct of bank representatives creates a level playing field with mortgage brokers in ensuring adequate and reasonable consumer protection,” the Mortgage Broker Association of B.C. explained. “The position of the Provincial Associations is clear: If a bank representative is in any way dealing with third party transactions they need to operate under the same rules as mortgage brokers with the requisite regulation and training.”

And it isn’t just the MBABC who is leading the cause.

“The MBABC in conjunction with other associations has made a joint submission to the Mortgage broker Regulator's Council of Canada, which includes regulators from BC, Alberta and Ontario, on some key issues relating to mortgage broker regulation,” Samantha Gale of MBABC told “These issues include the regulation of roving bank representatives and suitability standards.  The MBABC met with the MBRCC at their industry meeting on November 23 and addressed some of these issues.”

The recommendations outlined the differences between a mortgage broker and a bank mortgage specialist.

“(A broker’s) role is to shop for mortgages at different financial institutions and find the most suitable deal that fits the borrowers’ needs –this is what makes them an agent or a quasi-agent for the client mortgage brokers also have a clear and unequivocal duty to disclose conflicts of interest to clients,” they said. “This model of brokering contrasts starkly from that adopted by the bank road representative who is fundamentally a salesperson, whose focus is selling mortgages to customers using a model where the bank is the quintessential mortgage shop.”

The three organizations also put forth a compelling argument as to why the same rules should apply to all professionals who have the ability to sell mortgage in Canada.

Of course, this wasn’t the only issue presented. They also made recommendations for suitability, principle based regulation and education. Regarding education, they outlined a proper philosophy called for one association per province to govern the education of brokers.

“Education should be about attracting individuals who want to be well trained professionals not those trying to fast track or find workarounds from doing the necessary work,” they said. “One association per province delivering all professional development or all licensing would allow for shared costs, improved standards and greater professionalism through a shared foundation that can accommodate regional differences.”

  • Welbanks 2013-11-28 10:01:50 AM
    I'm a huge proponent of brokers, but I don't see this type of action as necessary. There is a difference in what we do versus the bank reps. They work for a bank and they peddle bank products. Period. There is no risk of clients being charged ridiculous fees or conflicts whereby the bank rep is somehow lending their money to the client as a private mortgage. If they are, and it's brought to the surface, the bank will surely punish them for it. I don't see the banks needing the oversight as much as we do. That's not to say there aren't bad apples with the banks, but they aren't selling third party products with the potential for fees.

    The brokers need to be held to a higher standard because we pose more risk to the consumer. I know, we can all bitch and complain that things aren't level, but we're not playing the same game.

    If you want to turn down your licensing requirements, then go work for a bank and sell their product. Otherwise, show the public how much we can shine as brokers, why we are the better option.

    Just because we have to take more courses doesn't change the game. The fact is, bank reps are employed by the bank. We are independent, self-employed sales people and this is the one way to keep us accountable.

    That's not to say some education requirements couldn't be required, but similar licensing may be a bit of a stretch. These products aren't rocket science. It's unfortunate the barrier to entry is so low, but then again it lets poor moops like me make a good dollar for my day. =)
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  • Samantha Gale, MBABC 2013-11-28 10:36:24 AM
    One of the challenges with this subject is that there is an absence of facts from which to base our positions on. However, one thing we do know is that the banks are in fact acting like mortgage brokers. In one jurisdiction, one of the banks has historically been outperforming the mortgage broker houses in deal submissions to a particular B lender. Make no mistake there are employees of federally regulated institutions who are acting just like mortgage brokers, but without the requisite disclosure and fiduciary like obligations being applied to them. At the MBABC, our members have let us know that this is an important issue for them - not an easy one to tackle of course! However, we can start by having a dialogue about the issues and determining some common ground.
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  • Gordon McCallum 2013-11-28 10:45:03 AM
    Another thing MBABC / FICOM should push for is to be more strict about the payment of referral fees to unlicensed individuals, as some of the banks are doing with Realtors in BC. This is illegal in Alberta which dates back to a lawsuit between the province and TD Bank. That would go a long way towards ensuring that people who aren't licensed as a broker stop acting like they are.
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