Holding a mortgage agent or broker licence does not allow you to lend money or conduct transactions outside a licensed brokerage. All mortgage transactions in Ontario must go through a licensed mortgage brokerage or an exempt party, regardless of whether a fee is being charged. Failing to follow these requirements can expose both you and your brokerage to serious regulatory consequences.
An individual broker or agent licence allows you to deal in mortgages only on behalf of your authorizing brokerage. It does not authorize you to act on your own as a mortgage lender without an intermediary (like a brokerage or an exempt party). If you are lending your own funds, the transaction must still be processed through a licensed brokerage and remain subject to its oversight.[1]
Keep in mind, your brokerage is not required to allow you to act on your own as a lender for clients. Some brokerages may prohibit this activity entirely or permit it only under stricter conditions. These conditions can include measures to manage and disclose conflicts of interest, additional internal approvals and other due diligence beyond what would apply to a typical transaction. These decisions are part of the brokerage’s responsibility to supervise activity conducted under its licence.
Remember, don’t hide outside concurrent business activities from your principal broker, as they can land both of you in serious trouble.[2]
There is similar confusion regarding permitted activities for mortgage administrators. Again, an administrator licence is not a licence to lend. If an administrator is advancing funds or otherwise acting as a lender, the transaction must still go through a licensed brokerage or an exempt party, even where the individual operating the administrator also holds an agent or broker licence.
Recent enforcement actions highlight why these requirements matter. In one case involving broker lending activity conducted outside the brokerage, FSRA imposed significant penalties and licensing restrictions after concluding that mortgage transactions were carried out improperly. While enforcement outcomes depend on the facts of each case, the consequences in this particular circumstance demonstrate the risks associated with bypassing brokerage involvement.
We urge you to review your brokerage’s policies and procedures and consult with your principal broker before engaging in private lending or other outside business activities. Remember, brokerage oversight is not optional. It’s a core safeguard that supports consumer protection, effective supervision and confidence in the sector.
[1] Private lending in your own name must conform to your brokerage’s policies and procedures on concurrent business activities and must be processed through a licensed mortgage brokerage or exempt party. If you are lending from a personal service corporation rather than your personal funds, the transaction is permitted only if it is processed through your authorizing brokerage. For further detail, see the limitations applicable to personal service corporations in O. Reg. 407/07 s. 8.1.
[2] MBLAA, s. 48(2) through conduct referenced in O. Reg. 187/08, s. 3.