14 | winter 2014 mbabc.ca MortgageBroker
THERE HAS BEEN A LOT OF DISCUSSION
recently about the concept of principles-based
regulation. In December 2013, the federal
government initiated a consultation proposing
the adoption of principles or standards to
support regulations protecting consumers
dealing with financial institutions. Principles-
based regulation already has a strong foothold
in many countries, such as England, and many
other professional circles in Canada, such as
insurance and financial advisors.
e
MBABC in conjunction with AMBA,
IMBA and the MBAAC made a joint submission
to the Mortgage Broker Regulators' Council of
Canada in November of 2013 to recommend
the greater use of a principles-based approach.
So just what is principles-based regulation
and how can it benefit the mortgage broker
industry?
The distinction between principles
and rules
Rules are generally objectively determinable.
For example, a requirement that a member
shall file a Form 123 by March 15 of each
calendar year is satisfied so long as the
member files the form by the required date.
Principles are generally expressed as standards
and require consideration of the context in
which a questionable conduct has occurred.
For example, to establish whether a member
who is required to reasonably ensure that a
borrower is aware of a certain fact met that
standard requires a review of a number of
considerations including: the method used by
the broker to bring the item to the borrower's
MBABC
and
allied
associations
are
poised
to
discuss
the
benefits
of
principles-based
regulation
Is There a Better Way t o Regulate
Mortgage Brokers?
BY Ray Basi
p14-19_Principle_Self Regulation.indd 14 14-01-27 11:40 AM
