Mortgage Brokering – News you need, volume 11 | Financial Services Regulatory Authority of Ontario

Welcome

Dear mortgage professionals,

Ongoing economic uncertainty continues to create increasing challenges for Ontario’s borrowers. As a result, some consumers may have to consider a private mortgage instead of traditional financing. Consumers may also need to rely heavily on the guidance and expertise of a mortgage agent or broker when considering these products.

That makes executing on your regulatory responsibilities especially important. Brokerages must ensure that agents and brokers are appropriately trained and supervised. Agents and brokers must understand the features and risks of the mortgage products they recommend and ensure those recommendations are suitable for each consumer’s needs and circumstances.

This newsletter begins with an article on recruitment practices for a reason. In the coming 12 to 18 months, FSRA will be reviewing recruitment practices across sectors. For mortgage brokerages, this review will seek to examine whether brokerages are recruiting agents and brokers that are suitable to remain licensed. Recruitment practices can affect how effectively consumers are served and how brokerages manage conduct and compliance risks. Inadequate controls relating to recruitment increase risks for consumers and can diminish their confidence in the sector.

Effective oversight starts before an agent or broker joins a brokerage. Brokerages must conduct proper due diligence when recruiting and hiring. Conduct or competence concerns can follow an individual from one firm to another if they are not properly addressed.

FSRA’s review of recruitment practices, both in the mortgage brokering sector and the life and health insurance sector, is intended to assess whether industry practices are meeting regulatory expectations and where they are not, we will take appropriate action for those licensees where gaps are found. Strong recruitment and oversight practices support higher standards for the sector, reinforce public confidence, and are good for business.

In the same vein, agent and broker compensation arrangements can be complex. This newsletter includes a timely review of licensee obligations to clearly disclose to consumers how they are compensated in relation to the mortgage transaction.

Agents and brokers need to understand how their compensation is determined and clearly explain those arrangements to clients. In some cases, the ability to disclose the means of calculating the precise amount may not be readily available at the time of a transaction. When that happens, brokerages must provide a reasonable estimate and update consumers as more information becomes available.

Brokerages should review their compensation disclosure policies and procedures to consider whether their current practices meet regulatory expectations and address any gaps identified.

We encourage you to read the following articles and all other relevant FSRA publications to stay informed and protect your clients and business.

Principal brokers, do not forget to register for our Principal Broker Conference on November 23. We are excited to again host a full day conference tailored to support brokerage owners, principal brokers, chief compliance officers, team leads, directors, officers, and partners in strengthening their compliance supervision and consumer protection practices.

Thank you for your continued efforts to support a safe and thriving mortgage brokering sector in Ontario that provides both consumer choice and consumer protection.

-- Gina Stephens, Director, Mortgage Broker Conduct

Recruit for quality, not quantity

Recruitment is about more than simply growing your business. The people you bring into your brokerage can directly affect the quality of advice consumers receive and shape confidence in your brokerage and the mortgage brokering sector more broadly.

What happens in one industry doesn’t stay in that industry

Two recent Financial Services Tribunal decisions offer important lessons for the mortgage brokering sector. They reinforce that FSRA may consider conduct outside its regulated sectors when assessing suitability and can use different enforcement tools to address misconduct and protect consumers.

Do your clients understand how you’re paid? Review your compensation disclosures today

Clear information about how you’re paid helps consumers understand the advice they receive and make informed decisions. When compensation disclosures are incomplete, unclear or provided too late, consumers may not have the information they need, and your business may be exposed to regulatory action.

Mortgage administrators: file your financials on time to avoid penalties

Mortgage administrators must submit their Annual Financial Filings on time every year, and filings must be accurate and complete. The deadline is 90 days after the end of your fiscal year, and late or incomplete filings may result in enforcement action.

Dealing in syndicated mortgages? Securities regulations may apply

Syndicated mortgage investments can fall under more than one regulatory framework. Depending on the transaction and the investor, mortgage brokering and securities requirements may both apply.

Can you support that property value?

The value of a property is key to determining the risk of a private mortgage. Lenders and investors rely on accurate valuations to understand how much they can safely lend, which means you must document how and why a property’s stated value was determined.

Review your AML and ATF compliance program for effectiveness

October 2026 marks two years since the mortgage sector became subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its regulations. One requirement is to review and test the effectiveness of your compliance program at least every two years.

Mortgage Brokering – News you need, volume 11

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