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Update – Supervision Approach for High-Risk Syndicated Investments

TORONTO, NOVEMBER 12, 2019 - FSRA is committed to strengthening protection of investors in what is identified as “high-risk syndicated mortgages.” Mortgage brokerages and mortgage administrators must provide adequate disclosure of the risks associated with these types of syndicated mortgages in a way that is easily comprehensible to investors.

Update

On August 7, 2019, the Financial Services Regulatory Authority of Ontario (FSRA) posted and asked for feedback on its draft - Proposed Supervision Approach for High-risk Syndicated Mortgage Investments 2019-002; and proposed disclosure - Form 3.2.1 – Supplemental Disclosure for Retail Investor in a High-Risk Syndicated Mortgage. FSRA also sought feedback on reducing regulatory burden on lower-risk syndicated mortgage transactions (including the syndicated mortgage forms 3.0, 3.1, and 3.2.).

FSRA appreciates the submissions provided from the 32 respondents to this public consultation, which was open from August 7 to September 6, 2019.  

Next steps

FSRA is pleased to see that both the approach and disclosure were well-received. In general, there is support from respondents to the principles outlined in the draft Supervision Approach and for the underlying objectives of the supplemental disclosures introduced in Form 3.2.1.

Based on this supportive feedback, FSRA will implement the Proposed Supervision Approach for High-risk Syndicated Mortgage Investments 2019-002; and proposed disclosure - Form 3.2.1 – Supplemental Disclosure for Retail Investor in a High-Risk Syndicated Mortgage.

As of November 12, 2019, the Supervision Approach and Form 3.2.1 – Supplemental Disclosure for Retail Investor in a High-Risk Syndicated Mortgage, will be implemented by FSRA.

FSRA has also been considering its approach to reducing burden on lower-risk syndicated mortgage transactions, based on feedback provided through the public consultation, and intends to release details of its plans soon.

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