Mortgage Broker

brokeringbankers 32 | summer 2017 cmba-achc.ca CmB magazine does not limit banks' abilities to dictate the terms of that relationship or otherwise limit their activities. Similarly, even if foreign currency conversion is accepted as being part of the core of the federal banking power, imposing a broad disclosure requirement for charges relating to currency conversion in no way impairs that power." We can easily apply the principles as set out by the Supreme Court in Marcott to the case of bank mortgage brokering or dealing. Complying with the requirements of mortgage broker licensing does not prevent banks from brokering or dealing in mortgages. ere are not even any competing provisions of the Bank Act or regulations that govern the act of brokering mortgages. e additional criticism from the CBA that provincial consumer protection requirements imposed on banks will confuse consumers is not necessarily accurate either. is is particularly true in the case of bank mortgage dealing, as the public generally views banks as deposit takers and lenders, and not as financial intermediaries. In the case of non-licensed bank mortgage dealers, the public will surely be more confused (perhaps even shocked) by the concept of bank employees acting like brokers, than the provincial regulation which may govern this scenario. Steven Gargani summed the issue up as follows: "e AMS is paid a referral fee from the secondary lending institution and or charges a fee. at's right . . . they charge a fee!! And you guessed it, the mortgage rep is compensated at the end of the day based on the fees earned on the mortgage . . . Effectively, RBC is brokering mortgages without being a broker . . . Let's give credit where it's due . . . they have become a mortgage brokerage without having to follow the strict regulations and guidelines of becoming a broker." Mortgage Broker Licensing Legislation has Been Capturing non-licensed Bank Mortgage dealers Mortgage brokers and administrators in New Brunswick have been required to obtain licensing with the Financial and Consumer Services Commission (FCSC) as of April 1, 2016. e new licensing requirements mean that all persons who arrange mortgages for borrowers and private investors, or who administer mortgages on behalf of private investors, will no longer be able to operate without a required licence. But exactly who is captured by the new licensing requirements? e New Brunswick legislature has taken a progressive approach to draing its mortgage broker licensing statute, with many of the provisions mirroring those contained in the Ontario licensing statute. One is that New Brunswick appears poised to regulate non-licensed bank mortgage dealers by requiring those who place borrowers with third party mortgage lenders to get licensed. As expected, financial institutions, which include banks and insurance companies, are exempt from New Brunswick licensing requirements for mortgage brokers. e FCSC explains the rationale: "Banks, including their affiliates and subsidiaries, as well as other federally regulated financial institutions, are subject to federal oversight." However, the FCSC, when draing the rules, received recommendations from the public which urged the FCSC not to exempt financial institutions from licensing requirements "when the person representing the financial institution arranges a mortgage with a third party lender who is not that financial institution (or its affiliate or subsidiary)." is is because when "the lender is unable to place the borrower with their own mortgage products, then they are conducting mortgage brokering activities and should not benefit from the exemption for financial institutions." Accordingly, the majority of bank mortgage specialists who place mortgages with their own employer are exempt, while those, fewer in number, who broker or arrange mortgages with other lenders will now need to get licensed as a mortgage broker in the province of New Brunswick. e Ontario mortgage broker legislation contains a similar exemption provision. However, despite being in force for the last 10 years, it appears to have had next to no traction, as not a single bank broker doing third party lending has yet obtained mortgage broker licensing in Ontario. Recommendations for Improving Oversight in Relation to Bank Mortgage Brokering e CMBA has urged the government to take action to ensure that non-licensed bank mortgage dealers comply with certain provincial consumer protection statutes that govern areas of exclusive provincial jurisdiction, such as mortgage broker licensing. Mortgage broker licensing statutes provide detailed, well-considered and essential consumer protection requirements in the absence of any similar federal requirements. It makes sense to put the non-licensed bank mortgage dealer on the same level playing field as other provincially licensed mortgage brokers, in order to ensure that robust consumer protection rules are effective and enforceable against the entire mortgage brokering industry. 1 https://www.canada.ca/en/financial-consumer agency/ news/2017/06/fcac_appearance_ 2 https://www.mbrcc.ca/files/pdfs/en/product%20Suitability %20review.pdf 3 http://www.cba.ca/assets/CBa/Files/article%20Category /pDF/sub_20140227_consumerprotection_en.pdf, page 4 Mortgage broker licensing statutes provide detailed, well-considered and essential consumer protection requirements . . . it makes sense to put the non-licensed bank mortgage dealer on the same level playing field as other provincially licensed mortgage brokers.

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