The Ontario government is proposing sweeping changes to the Mortgage Brokers Act, legislation that has not been significantly updated for 30 years.
The Financial Services Commission of Ontario (FSCO) — the agency responsible for overseeing mortgage brokers in the province — says it wants to improve consumer protection, streamline regulation and harmonize Ontario’s rules with other jurisdictions.
“The business of mortgage brokers is changing along with the broader financial services sector,” says Mike Colle, parliamentary assistant to the minister of finance. “We want to make sure the legislation keeps current with these emerging trends.”
There are approximately 600 registered mortgage brokers in Ontario. However, the province’s real estate brokers, lawyers and accountants can also register as mortgage brokers without meeting any additional conditions, such as educational requirements.
That’s a concern for FSCO, particularly in the case of real estate brokers, since the regulator is unable to take enforcement action against real estate brokers who are dealing in mortgages “in a manner that may be detrimental to consumers.”
FSCO also wants to introduce tougher penalty provisions for mortgage brokers who break the rules and plans to review educational requirements, currently a two-semester program provided by Seneca College.
The consultation paper seeks input on a number of other questions, including whether mortgage brokers should be required to follow practice standards and carry errors and omissions insurance.
In addition, the paper asks whether financial intermediaries dealing in reverse mortgages should have to register as brokers and if agents working for mortgage brokers, currently numbering more than 5,000, should be forced to meet minimum proficiency standards.
Comments on the consultation paper are due by September 3.
Filed by Doug Watt, Advisor.ca, email@example.com