Mortgage Broker

CMB MAGAZINE cmba-achc.ca summer 2016 | 45 financialservices Earlier this year, the Ontario Minister of Finance released a report which recommends significant changes to the regulatory structure overseeing the mortgage broker industry in Ontario. e March 21 report, titled "Review of the Mandates of the Financial Services Commission of Ontario, Financial Services Tribunal, and the Deposit Insurance Corporation of Ontario," acknowledges some key criticisms of the FSCO, the current mortgage broker regulator – in particular, a lack of effective enforcement, resources and accountability. e report recommends a new structure be created, to be called the Financial Services Regulatory Authority (FSRA), and that it be entirely self-funded and governed by an expert board of directors. While there is no specific recommendation for self-regulation, the proposed new structure would be set up to accommodate self-regulation by enabling the authority to delegate functions to a self-regulatory organization (SRO). e report makes it clear that the FSRA would need to hold an SRO accountable for performing its regulatory functions. Another key recommendation is that the FSRA take on the regulation of payday lenders and loan brokers, consumer-credit reporting agencies, debt and credit counsellors, and guarantee and warranty insurers. Syndicated mortgages are also a focus in the report; it urges regulation of this area of the industry, which is as robust as the Ontario Securities Commission. Another consumer-protection provision would be the establishment of a fraud-compensation fund to protect the public from fraudulent agents, brokers and corporations. In contrast to the Ontario report, which is highly critical of government regulation in the financial services sector, the Real Estate Council of British Columbia released a report on June 28 titled "Report of the Independent Advisory Group On Conduct and Practices in the Real Estate Industry in British Columbia," which is highly critical of its own self-regulatory industry practices. e report identifies systemic weakness in the real estate SRO, which resulted in anemic and ineffective disciplinary measures being imposed on non-compliant industry members. A day aer the release of the report, BC Premier Christy Clark announced that her government would adopt all 28 of its recommendations and remove the real estate industry's self-regulating power. A dedicated Superintendent of Real Estate would take over certain regulatory functions – such as discipline and rule-making – on behalf of the government. While the Ontario report harshly criticizes government's ability to regulate, and the B.C. report clearly criticizes the industry's ability to self-regulate, both reports ultimately recommend the same thing: a robust consumer-protection-orientated regulatory structure in which government has strong oversight over any regulatory functions undertaken by industry through an SRO. Provincial reports call for sweeping regulatory reforms of mortgage brokerage and real estate industries BY SAMANTHA GALE, CMBA EXECUTIVE DIRECTOR

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