TORONTO, ON–The Financial Services Regulatory Authority of Ontario (FSRA) wants to enhance conduct standards for mortgage brokering in Ontario.
The FSRA is releasing a proposed Approach Guidance to help Ontario mortgage professionals comply with a proposed National Code of Conduct (Code). It is seeking industry and consumer comments on its proposed approach to incorporating the Code in its supervision. It is inviting them to submit feedback via the FSRA website until January 15, 2021.
The Code, according to the FSRA, promotes high standards of business conduct to protect consumers of mortgage brokering services. The principles of the Code correspond to existing conduct requirements in the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA) and its regulations. These requirements help ensure consumers are treated appropriately.
The FSRA will consider adherence to the Code as a factor in assessing whether an individual or entity is suitable for licensing. Non-compliance with the Code may indicate failing to meet certain obligations under the MBLAA.
The guidance affects the following entities regulated by FSRA:
The MBLAA and its regulations govern mortgage brokering activities in Ontario. The Code is a plain-language guide to help licensees comply with the MBLAA and its regulations; it will also help consumers understand licensees’ obligations. It promotes regulatory compliance, confidence in the sector and the interests of consumers who deal with licensees.
The proposed Code has these principles:
1. Compliance/Outcomes. Regulated persons and entities must comply with the letter of legislative/regulatory requirements. They should also ensure their employees and third-party partners comply. Their conduct should reflect industry best practices and achieve the outcomes intended by these requirements.
2. Accountability. Regulated persons and entities must act in a responsible/accountable manner. They must exercise care, due diligence and sound judgement in providing their products and services.
3. Honesty. Regulated persons and entities must conduct their activities in a truthful, clear and transparent manner. They must not mislead, hide or obscure material information.
4. Competence. Regulated persons must develop and maintain the skills, knowledge and aptitudes necessary for their business activities. They should decline to act when they are unable to provide products/ services in accordance with this Code.
5. Suitability. Regulated persons and entities must provide options for products/services that are suitable for their client(s). They must have a sound understanding of how the products/services match the circumstances of their client(s).
6. Disclosure. Regulated persons and entities must disclose material information to applicable parties in a transaction. Disclosures must be made in an honest and timely manner. Disclosures are required for transactions completed in traditional or digital format.
7. Management of Conflicts of Interest. Regulated persons and entities must identify and disclose actual or potential/perceived conflicts of interest to applicable parties in a transaction. They should have documented strategies for managing such conflicts.
8. Security and Confidentiality. Regulated persons and entities must protect their clients’ information. They must use the information only for purposes for which the client has given consent.
9. Stewardship. Regulated persons and entities should act with integrity and respect. They must not engage in any act or omission that would bring disrepute to or undermine the public’s confidence in the industry.
10. Co-operation with Regulators: Regulated persons and entities must co-operate with mortgage brokering regulators. They should report possible violations of laws, regulations or this Code to the appropriate authority. They must not retaliate against those who make or intend to make such reports.
The Mortgage Broker Regulators’ Council of Canada (MBRCC) has been working with the Canadian mortgage brokering industry to develop this proposed Code, said the FSRA, in response to industry feedback from the Canadian Mortgage Brokers Association–Ontario (CMBA-ON) and Mortgage Professionals Canada (MPC). The MBRCC and the industry believe consumers would benefit from consistent minimum conduct standards for mortgage professionals across Canada.
Consumers of mortgage brokering services can use the Code to learn more about their rights. They can also use it to find out what appropriate service looks like. The MBRCC is consulting with industry and consumers on the proposed National Code that the FSRA may adopt.