Mortgage Broker

letters to the editor update Form 10 Update Where are things at with the Form 10? Is FICOM going to be asking us to tell borrowers the exact amount of our commission? Concerned broker Kamloops, B.C. Reply: e British Columbia Registrar of Mortgage Brokers [services are provided to the Registrar by the Financial Institutions Commission (FICOM)] proposed requiring brokers to disclose in dollars terms, as part of the Form 10 conflict of interest disclosure, the commission and volume bonuses, plus other rewards that a broker and their brokerage receive from a lender. A broker would also need to disclose compensation that co-brokers receive on the transaction. MBABC and others expressed concern about the process followed by the Registrar in arriving at this position. e Registrar responded on January 6, 2016, with an open letter to mortgage brokers allowing for a period of consultation. e letter reads, in part, as follows: e Financial Institution Commission's (FICOM) expectations regarding compensation disclosure have prompted much discussion and feedback. As our consultations progress I wanted to share with you what we have learned so far, invite your ongoing ideas and questions, and provide additional information on some important matters that industry has raised. We have learned through our consultations over the previous six months that: l You want consumers to continue to receive quality mortgage advice. l You want consumers to understand the disclosure being provided, particularly any dollar amounts. l You want to ensure that disclosure is not required to an unreasonable degree of accuracy, particularly when it comes to volume bonuses. l You want to know how to disclose compensation splits between brokers and brokerages. l You want to know when the changes are coming, how they will be rolled out, and how you can prepare. FICOM welcomes ongoing discussion with you on these and other important issues and questions. is will help us ensure that the interests of consumers, industry and FICOM are appropriately balanced in our regulatory requirements. e letter goes on to provide the Registrar's responses to some of the comments already received. e entire letter is available on the Registrar's website at www.fic.gov.bc.ca/pdf/ mortgagebrokers/consultationletter.pdf. e MBABC thanks the Registrar and her staff for this important opportunity. We appreciate their willingness to consider the perspectives of MBABC and others. e comment period for the consultation ended on February 20, 2016. We look forward to working toward a resolution of this issue with the Registrar. False Advertising? A Designated Individual in British Columbia was asked to approve an advertisement for a submortgage broker. e proposed advertisement referenced a website domain that utilized the company name belonging to the mortgage broker entity, although the name was slightly changed. e Designated Individual expressed concern that the submortgage broker's use of the domain may make it look like the submortgage broker is the mortgage broker entity. e Designated Individual's question is, can the submortgage broker do this? A telephone inquiry from a B.C. Designated Individual Reply: British Columbia requires that a brokerage has a Designated Individual. One of the Designated Individual's responsibilities is to act as a compliance officer to oversee that others at the brokerage comply with regulatory requirements. Many other provinces also require someone to perform the role of overseeing compliance; the person may have a title such as Authorized Official or Principal Broker. British Columbia brokers, like brokers in many other provinces, are subject to the regulatory requirement that advertisements not be false, misleading or deceptive statements. If the advertisement does not clearly state the person's registration status (that is, that he or she is actually a submortgage broker), it may be considered misleading. While the domain name could be seen as only an Internet address and not as content, it could instead be seen as part of the advertising package. It would be safer to reduce the potential for misunderstanding by clearly stating the person's registration status. As a general policy, the person in charge of compliance should: l control/acquire all related domains so other people cannot use them; and l have a contract with underlings (such as submortgage brokers) which sets out advertising requirements and domain use, including that the submortgage broker requires approval from the person in charge of compliance before publishing any advertising. Please send letters to the editor to: info@cmba-achc.ca letters CMBA MEMBERS' VIEWS 20 | fall 2015 mbabc.ca MortgageBroker From time to time various law and policy makers from jurisdictions across North America consider the concept of requiring mortgage brokers to disclose to borrowers the details of any originator compensation received from lenders. We need to ask whether this is a good idea. requiring detailed compensation disclosure makes intuitive sense: more information provided to mortgage consumers can only assist them in their mortgage shopping process. in addition, it enhances transparency, and it is hard to argue against enhanced transparency. By Samantha Gale revealing broker compensation fails to benefit — and actually harms — mortgage consumers Indecent dIsclosure ForM 10 10 | winter 2016 cmba-achc.ca CMB MAGAZINE

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