summer 2017 cmba-achc.ca CmB magazine | 29
i
n May of this year, the House of
Commons Standing Committee on
Finance adopted a motion to examine
the practices of Canada's Schedule I
banks in relation to the sale of financial
products and services to their customers. e
focus of the review is intended to examine
current bank issues relating to sales practices
and incentives for employees; opportunities
for redress; codes of conduct; and penalties
for codes of conduct breaches.
It was revealed during the Committee's
hearings that the Financial Consumer Agency
of Canada (FCAC), which is the market
conduct regulator for the banks, is currently
investigating "the extent to which Canada's
Schedule I banks are complying with the Bank
Act and certain codes of ethics, as well as the
ways in which sales goals and incentives are
contributing to practices that result in poor
outcomes for their customers".1 A report on
the FCAC's findings should be completed
by June 2018.
For some time, the mortgage broker
industry has expressed concern over
the lack of a level playing field between
licensed mortgage brokers and those
employees at banks who engage in the
practice of mortgage brokering, but are not
licensed under provincial mortgage broker
licensing legislation. ese are not the
bank representatives who place mortgages
with their own financial institution, but
actual brokers who place deals with third
party lenders. ere is some debate about
what these bank employees who engage in
brokering activity should be called. Some
industry members feel strongly that referring
to them as brokers seriously undermines
the title of "mortgage broker", which is
endowed upon licensed mortgage brokers
only through their compliance with licensing
requirements. And of course, while some
employees working for banks are clearly
acting as mortgage brokers by placing oen-
unwitting borrowers with third party lenders,
their ultimate loyalties are always to the bank
– they can never truly be intermediaries who
put the client first. In this article, they shall
therefore be referred to as non-licensed
bank mortgage dealers.
With the current review of bank consumer
protection issues undertaken by both the
FCAC and the Parliamentary Finance
Committee, the CMBA took the opportunity
to make submissions to the Committee on
the subject of non-licensed bank mortgage
dealers. e submissions were as follows:
Lack of a Level playing Field with
Bank Mortgage Brokering
In August 2014, the Mortgage Broker
Regulators' Council of Canada published a
report assessing mortgage broker practices
related to ensuring mortgage product
suitability for clients.2 In reviewing this
report, many mortgage brokers have favoured
the creation of mortgage broker product
suitability standards, but only if the banks had
