ID
2024-006

Type
Policy
Sector
Mortgage Brokering
Status
Public comment closed
Date
Comment Due Date

Thank you for providing your feedback on FSRA’s proposed Guidance on ‘Enhancing strong conduct and compliance culture: The role of Mortgage Brokerages and Principal Brokers’.

The request for submissions is now closed.

We appreciate the comments and questions received to date and look forward to sharing with you the final Guidance. Stay up to date on Guidance releases on our newsroom. Follow us on LinkedIn and subscribe to our mailing list for quick updates.

To help ensure homebuyers and mortgage investors are treated fairly, Ontario’s financial services regulator, FSRA, is proposing Guidance to raise the overall professionalism of the mortgage brokering sector.

The Guidance for mortgage brokerages and principal brokers sets out proposed practices to make principal brokers more effective at carrying out their responsibilities, including:

  • ways a brokerage can ensure its principal broker acts with integrity, demonstrates professional competence, and has the necessary independence, authority and resources to satisfy their regulatory responsibilities. Brokerages can adapt the proposed practices to be appropriate for their size and operations.
  • how principal brokers can demonstrate they are taking reasonable steps to ensure fair outcomes for consumers by effectively hiring, training and supervising suitable brokers and agents

FSRA’s proposed Guidance addresses concerns that some principal brokers are not as effective as they could be in influencing the strong conduct and compliance culture of their brokerages. A 2020 FSRA survey indicated that only 50% of principal brokers at brokerages with over 100 licensees had this authority.

The consultation period is now open and will close on June 28, 2024. FSRA invites stakeholders to review the proposed Guidance and submit their feedback.

Learn more:

FSRA continues to work on behalf of all stakeholders, including consumers, to ensure financial safety, fairness, and choice for everyone.

Learn more at www.fsrao.ca.

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No comments have been added to this consultation yet.
Date posted Sector Question and response
Mortgage Brokering

Question: Hello, I just attended Antoinette Leung's webinar session earlier today on this proposed Guidance. I submitted my question to the survey feedback, but now I realize it is more appropriate to ask on this consultation forum.

I am particularly interested in understanding how FSRA ensures that unethical principal brokers are unable to introduce unfair bias into the samples they provide for examination.

For examples:

If FSRA requested principal brokers to demonstrate that they had reviewed some files to ensure compliance and fair consumer outcomes, some unethical principal brokers could introduce unfair bias into the samples provided to FSRA by
1) Cherry-picking the sound files to demonstrate to FSRA and
2) Backdating the samples provided to FSRA to make them appear to have been reviewed as part of their due diligence process.

So, how does FSRA plan to catch and deter these unethical practices in your examination?

FSRA response:

Thank you for taking the time to participate in our recent webinar on FSRA’s proposed Principal Broker Guidance.  Thanks, as well, for your follow-on question about our examination processes and how FSRA ensures that examinations are both unbiased and effective.  The brokerage itself, and its principal broker, do not determine which mortgage files are selected and examined, rather FSRA staff select those files based on several pre-determined criteria from the brokerage’s total pool of mortgage files. Our examination programs incorporate a combination of pre-set objective selection criteria, judgemental sampling, and random sampling to reduce the potential for unfair bias influencing the file selection process. 
 
Thank you again for your inquiry and for your interest in our proposed Guidance.