Mortgage Broker

Winter 2014

Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.

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Page 13 of 47

14 | winter 2014 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

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