Mortgage Brokering – News you need, volume 3

In this issue


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Welcome to the summer 2022 edition of the Financial Services Regulatory Authority of Ontario’s (FSRA) mortgage brokering sector Newsletter. In this issue, we are sharing with you our supervision plan for 2022-2023, in addition to other information to support the industry’s compliance.

Interest rate hikes, inflation at a 30-year high and a potential real estate market correction have introduced a lot of uncertainty for consumers looking to finance their home or to make a mortgage investment. The mortgage brokering sector can add a lot of value to consumers by helping them navigate the uncertainty and look for the right mortgage solution that meets their needs.

Since it launched in 2019, FSRA has worked closely with the industry to strengthen competency and integrity in the sector. We introduced an Industry Code of Conduct, created a new licensing class for brokers and agents dealing in private mortgages, and enhanced education requirements for private lending. This year, we will build on these initiatives by focusing our supervision in the following areas:

  • private mortgage brokering
  • conduct culture and compliance structure at large mortgage brokerages
  • two specific scenarios where financially vulnerable consumers may be more prone to misconduct: reverse mortgages and mortgage brokering by brokerages who also operate a mortgage investment corporation

We believe that by focusing on how brokers and agents ensure suitability of the mortgage recommendations they make and how principal brokers are conducting their supervision, we can further our consumer protection mandate while strengthening the reputation of this sector, especially in the current uncertain times.

If you have questions about our supervision plan, newsletter or other publications, please feel free to reach out to the Mortgage Brokering Conduct team at [email protected].

Huston Loke
Executive Vice President, Market Conduct

FSRA takes steps to ensure Ontario homebuyers are protected

The Financial Services Regulatory Authority of Ontario (FSRA) is releasing its annual Mortgage Broker Supervision Plan. The focus for 2022-23 is to ensure mortgage brokers and agents protect their clients and keep their interests in mind by:

  • reviewing private mortgage brokering
  • reviewing the conduct culture and compliance structure at large mortgage brokerages
  • conducting compliance reviews in scenarios where financially vulnerable consumers may be more prone to misconduct or abuse

These actions will help FSRA ensure that consumers receive suitable mortgage products and investment recommendations that are easy to understand and meet their needs.

FSRA expects principal brokers, brokers, agents and administrators to review the 2022-2023 supervision plan. They should also review other FSRA publications for more on their licensing requirements and obligations.

New licensing and education requirements to better protect consumers

In April 2022, the government and FSRA implemented new licensing classes with enhanced educational requirements for brokers and agents working with private mortgage lenders and raising capital.

This initiative supports the Ontario government’s direction to introduce licensing categories that better respond to the unique practices required by certain segments of the mortgage market, and enhance competency in the mortgage brokering sector to better protect consumers.

Mortgage brokers, including principal brokers, and agents who wish to deal in private lending should take note of the following key dates:

  • April 1, 2023: new licensing classes come into effect
  • Early 2023 – Private Mortgages Course and Challenge Exam available
  • October 31, 2023 – deadline to pass the Private Mortgages Course Challenge Exam
  • March 31, 2024 – deadline to complete the Private Mortgages Course

See New Licensing and Education Requirements to Better Protect Consumers for more on what will change and what this means for you.

Brokerages must report accurate information in the Annual Information Return

Mortgage brokerages and mortgage administrators are required to file their Annual Information Return (AIR) with FSRA by March 31 of each year. To better protect consumers, FSRA uses the AIR information to review industry trends, and determine the nature and extent of its regulatory activities.

FSRA reviews AIR filings to assess brokerage and administrator compliance and accuracy in reporting. In the 2021 AIR data, FSRA noted common issues related to incorrect reporting. This suggests that principal brokers may not fully understand what data is required or are reporting inaccurate data. FSRA is following up with these mortgage brokerages and administrators to clarify the information reported and request the AIR be updated, where applicable.

FSRA also noted that between 2017 and 2020, 119 mortgage brokerages and 19 mortgage administrators did not file their AIRs for a single year or multiple years and it contacted these licensees to flag the non-compliances.

See Brokerages must report accurate information in the Annual Information Return to learn more.

FSRA actively working to protect the public through supervision and enforcement

FSRA’s approach to supervision and enforcement is meant to protect the public while maintaining high standards of conduct in the industry.

FSRA ensures that licensed mortgage brokers and agents conduct themselves appropriately and that they meet specific education and suitability requirements. Where FSRA finds misconduct, it issues a Notice of Proposal to impose an appropriate sanction. Sanctions can include administrative penalties requiring payment of a monetary amount, licence suspension or licence revocation.

These recent cases show the consequences of misconduct in the mortgage brokering sector:

  • Ashraf Koya – administrative penalties
  • Meerwise Habibzi – administrative penalties
  • Millicent Prince – licence revocation
  • Dinesh Khanna – licence revocation

See FSRA actively working to protect the public through supervision and enforcement for more details.

Better consumer protection needed in administration of non-qualified syndicated mortgage investments (NQSMIs)

Investors should have the information they need to make informed decisions about their mortgage investments. In continuing to review Legacy NQSMIs, FSRA found that mortgage administrators may not be providing adequate and timely information about these mortgage investments to investors. FSRA will therefore continue to examine mortgage administrators to better protect consumers.

Mortgage administrators should have processes in place to provide timely information to investors about their mortgage performance. In addition, they should accurately reflect their specific business operations and processes in their policies and procedures.

See Better consumer protection needed in administration of non-qualified syndicated mortgage investments (NQSMIs) to learn more about our findings and how they were addressed.

Mortgage brokerages no longer need to file NQSMI quarterly data report

Licensed mortgage brokerages are no longer required to provide non-qualified syndicated mortgage investment (NQSMI) data on a quarterly basis. Instead, brokerages will now be required to report this data once a year as part of their Annual Information Return (AIR) filing.

FSRA adopted this change to make it easier for industry to report NQSMI activity by consolidating reporting requirements, reducing the need to file multiple reports.

This new requirement will be in effect starting with the reporting period commencing on January 1, 2022. In their 2022 AIR filing, licensed mortgage brokerages will be required to provide information related to their NQSMI brokering activities under FSRA’s jurisdiction for the period January 1, 2022 to December 31, 2022.

FSRA guidance on its Supervision Approach for NQSMIs effective July 1, 2021 was updated June 27, 2022 to reflect this change.