Mortgage Broker

MORTGAGEBROKER mbabc.ca summer 2015 | 21 letters to the editor but we appreciate there is more than one of each in your circumstances. Submortgage Broker Changing Mortgage Brokers e Registrar issued MB 10-001 (Bulletin) titled "Use and Protection of Client Information." e Bulletin in paragraph 4 provides that a submortgage broker who changes brokers is not permitted to make use of client information obtained in the course of his or her registration with the former mortgage broker unless the new mortgage broker has obtained consent from the client to use such information. e Bulletin provides what the new mortgage broker must do to allow the transferring submortgage broker to make use of the specified prior client information. It does not impose any requirement on the old mortgage broker to disclose or share the client information. In fact, as the information belongs to the old mortgage broker and not the submortgage broker, a submortgage broker who copied or removed client information from the old mortgage broker without permission from the owning mortgage broker could be exposed to civil and criminal as well as possibly regulatory consequences. e new mortgage broker too could face consequences, depending on the degree of involvement. We fully appreciate that bulletins issued by the Registrar do not have the enforceability of law, but a regulator would experience practical difficulties making disciplinary and other decisions in conflict with them. Client Changing Mortgage Brokers e Bulletin in paragraph 3 provides that when a client changes mortgage brokers the previous mortgage broker must, upon receiving a written client authorization to transfer documents, cooperate with the newly retained mortgage broker by transferring all original client documents (such as original income tax documents and copies of other relevant file contents, such as mortgage applications and commitments) to the newly retained mortgage broker. e Bulletin in this context does impose a requirement on the old mortgage broker to transfer the type of documents listed. Note however that the requirement is triggered only if the old mortgage broker receives a written client authorization. A blanket letter from the new mortgage broker advising clients (presumably clients with whom the transferring submortgage brokers dealt) that their information is being moved with an aer-the-fact opt-out ability for the client does not amount to a written client authorization and hence is insufficient to trigger the obligation. Simply put, your obligation to provide the type of documents listed has not been triggered. In fact, there is nothing from the client to indicate the client has chosen to change mortgage brokers. In this regard note that the requirement, even if fulfilled, would be to transfer originals of the sorts of documents listed; the requirement would not be to transfer your entire file. If the old mortgage broker provides documents in the absence of receiving a written client authorization, he or she could be acting contrary to paragraph 2 of the Bulletin; paragraph 2 requires mortgage brokers and submortgage brokers to take reasonable steps to ensure that client information is not accessed by unauthorized persons (this would include an unauthorized new broker). Further, the old mortgage broker could be acting contrary to paragraph 1 of the Bulletin, which prohibits disclosure of information regarding a client or a transaction unless the disclosure has been authorized by the client or the disclosure is required by law. e tense of the Bulletin is of particular interest. It contemplates the written authorization coming before the disclosure and does not contemplate authorizations being provided following disclosure, by opt- out abilities or otherwise. Because of this the transfer of client documents without the required consent in advance would be contrary to MB 10-001 at the time of the transfer; it does not become contrary only if and when there is no further transferring of the file or breaching of privacy aer someone opts out. e rationale behind this is obvious – it is impossible to undo disclosure, at the client's request or otherwise, once disclosure has been made. Beyond the Bulletin, your collection, use and disclosure of personal information within British Columbia must be in compliance with the province's Personal Information Protection Act (PIPA). You are aer all a provincial entity, governed by a provincial regulator under provincial legislation, and being asked to disclose personal information within the province. PIPA, subject to some exceptions, prohibits an old broker from disclosing client information to the new broker except with consent from the client. Your situation does not appear to fit any of the exceptions. Sections 17 and 18 of PIPA are particularly relevant in this regard. PIPA can be found at http://www.bclaws.ca/Recon/ document/ID/freeside/00_03063_01. PIPA does provide for the obtaining of consent by an opt-out clause but it is not intended, by its limiting terms, to be used regarding information as sensitive as the client documents which would be on a mortgage broker's files. Further, at most, an opt-out option initiated by the new broker might authorize the new broker to collect personal information; it would not authorize the old mortgage broker to disclose the information. Given the sensitivity of the personal information, it is reasonable for you to insist on written consent signed by the client. Do note that while guidance or permission from the Registrar (preferably in writing) would support that you were being diligent in protecting your clients' privacy, it is the Office of the Information and Privacy Commissioner (OIPC) rather than the Registrar which oversees the application of PIPA. Even the Registrar is required to make policy and otherwise work within the parameters of PIPA and other privacy legislation. If the Registrar relies on any non- application of or exception to PIPA in making a specific policy, the Registrar is in the best position to demonstrate the authority and reasoning for the non-application or exception. It would be reasonable, if the issue arises, to ask for that reasoning. is would be useful if the OIPC later receives a complaint that you breached the privacy provided under PIPA; you would want to show you acted reasonably and diligently. Conclusion We believe your requirement for explicit written consent from the client to be reasonable, consistent with the Bulletin and compliant with PIPA. In our view, you could have taken the position that it is for the new mortgage broker to provide you with a signed authorization from each client or to demonstrate that you are obligated to transfer the requested documents. You might advise the new mortgage broker that you remain open to the demonstration. Please send letters to the editor to: editor@mbabc.ca

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