Annual Mortgage Broker Supervision Plan Highlights New Areas of Focus
TORONTO, July 28, 2022 /CNW/ - 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; and
- 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 examined private mortgage brokering last year and found that many brokers and agents were not following regulatory requirements and best practices and that must change," said Antoinette Leung, Head, Financial Institutions and Mortgage Brokerage Conduct. "Market uncertainties in 2022 may drive more consumers to turn to private lending. To ensure that brokers and agents help their clients find the right mortgage solutions, FSRA determined that private mortgage brokering must remain a supervision focus this year."
FSRA's focus on private mortgage brokering builds on measures already taken to address consumer protection in this area. Earlier this year, the regulator announced enhanced education requirements and a new agent licence class for those who wish to deal in private lending effective April 1, 2023.
FSRA shifted its supervision and focus this year to help address new areas of consumer risk:
- A nearly 20 percent increase of new and potentially less experienced professionals in the market; and
- Consumers showing higher-than-average levels of financial vulnerability, with 22 percent considered vulnerable compared to the provincial average of 20 percent
"Ontarians are facing new financial pressures due to record inflation and rising interest rates, and consumers should expect their broker or agent to provide solutions and have their interests top of mind," said Leung. "Brokers and agents must also provide adequate disclosure, so consumers understand the risks and implications of a recommended mortgage, especially in the current uncertain market. If a client doesn't understand something, FSRA strongly encourages everyone to ask questions."
The law requires brokerages to provide suitable mortgage recommendations to their clients. Brokers and agents must also disclose mortgage information in a timely and adequate manner. Principal brokers must take reasonable steps to ensure their brokerages, brokers and agents comply with regulatory requirements. This includes establishing, updating, and effectively implementing policies and procedures.
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.
SOURCE Financial Services Regulatory Authority of Ontario
Alex Kvaskov, Communications Officer, Financial Services Regulatory Authority, Email: [email protected]
Share this article