Mortgage Broker

MORTGAGEBROKER mbabc.ca summer 2015 | 15 members'news Streamlining customer identity verification On July 4, 2015, the federal government released e-commerce friendly amendments to the regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) which will greatly enhance the flexibility of financial institutions to obtain verification of a customer's identity. Now, regulated entities can verify a customer's identity in a variety of new ways, including: Using the customer's credit file, provided there is three years of credit history, to verify the person's name, address and date of birth. Using the identity verification performed by an affiliated entity, which is also regulated under the PCMLTFA, provided that a permitted method of verification was used by that entity. Also, identity can be verified by using any two of the following methods, provided that there are at least two different verification sources: Information from a reliable source, which contains the name and address of the customer; Information from a reliable source that contains the name and date of birth of the customer; or Information relating to a customer's deposit account, credit card or other loan account with a Canadian financial entity, if that information has been further verified. It is not entirely clear what will amount to a "reliable source." However, there is no doubt that these changes will provide greater needed flexibility in the identity verification process for financial institutions. ese new identity verification provisions will come into force on the day on which the regulations are registered. Weigh in on B.C.'s credit union policies The BC MinisTry Of finanCe has commenced a broad review of the Financial Institutions Act (FIA) and the related Credit Union Incorporation Act (CUIA). It has published a consultation paper which seeks stakeholder input on a variety of issues. Several issues might be of particular interest to mortgage brokers and lenders. e consultation paper explores the consumer complaint resolution process for credit unions, and asks: Should B.C. adopt a market conduct code for fair treatment of consumers that would apply to financial institutions? If so, should there be one code for all financial institutions or separate codes for different types of financial institutions? Should B.C. credit unions be required to have an internal complaint handling process and to offer members access to an independent ombudservice? Currently, the BC Government provides for unlimited credit union deposit coverage, which means that depositors can keep their deposits in one account, with the assurance that they are fully protected in the event of a credit union failure putting deposits at risk. However, the consultation paper now asks whether the deposit coverage should be limited, and what that limit might be. e Ministry also asks whether there are issues with the commercial lending thresholds which require re-evaluation. Specifically, "should B.C. consider adopting a more risk- sensitive approach to commercial loans (i.e., rather than assigning all commercial lending a 100 per cent risk weighting)?" Another issue raised concerns the fact that the credit unions limited access to capital markets, which may put them at a "disadvantage compared to other financial institutions when it comes to raising capital." e Ministry is seeking feedback on whether there are innovative capital instruments available to credit unions, that are not contemplated under B.C.'s current framework and, if so, should they be? Interested industry members can send submissions to the Ministry until September 15, 2015. Ontario reviews financial bodies The OnTariO gOvernMenT is currently conducting a review of the mandates of the financial services Commission of Ontario, financial services Tribunal and the Deposit insurance Corporation of Ontario. The Minister of finance has appointed a three-member expert advisory Panel to consult with relevant industry representatives, licensed market participants and consumers. The panel will seek to make workable recommendations to the government by early next winter. The OnTariO gOvernMenT is looking to strengthen consumer protection for a number of "alternative" financial services – it published a consultation paper, "strengthening Consumer financial Protection," in June, seeking stakeholder input on various issues affecting the payday loan lenders, instalment loans, debt collectors, pawn brokering, cheque cashing and rent-to-own agreements. The government states that "Consumers using alternative financial services generally have limited options for financial services. The cost of these services can add an additional financial burden that, depending on the consumer's income, may create a need for additional borrowing. This can create dependency on alternative financial services. some jurisdictions have addressed this issue by regulating the prices of some of these services." examples of how some other jurisdictions have regulated the cost of alternate financial services include: ■ limiting both the percentage and the dispensing fee of cheque cashing services (e.g., Manitoba sets a maximum charge allowed for cashing a government cheque at $3 plus 2% of the face value of the cheque); ■ setting the maximum total cost of payday lending (already set through the Payday Loans Act); and ■ limiting the price that rent-to-own dealers can charge to a multiplier of the dealers wholesale cost (e.g., set a maximum cash price that dealers can charge as a multiplier of the dealer's wholesale cost and varies according to product category). Price-control regulation could reduce the cost to consumers but could also result in some businesses leaving the market altogether, which would also reduce consumer access to these services. interested stakeholders can submit comments to the Ontario government until august 14, 2015. Boosting consumer protection

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