FSRA releases final Guidance to help ensure the fair treatment of consumers
TORONTO, June 19, 2024 /CNW/ - Ontario's financial services regulator (FSRA) is taking steps to ensure borrowers and investors receive mortgage products that suit them and meet their needs and circumstances.
FSRA is releasing final Guidance to help licensed mortgage professionals better understand their regulatory duties to promote fair treatment of consumers, conduct business appropriately and increase public confidence in the sector. This initiative will protect consumers and investors by enhancing standards around product suitability, whether they are looking for mortgage financing or investing.
"For most people, getting a mortgage is the biggest financial decision they will make in their lifetime, and we want to ensure their mortgage professional is giving them the best advice possible," said Huston Loke, Executive Vice President, Market Conduct at FSRA. "Our final Guidance sets out our expectations so that a consumer's needs and circumstances are well understood before a mortgage option is recommended to them."
FSRA developed the Guidance in anticipation of consumers increasingly relying on mortgage advice due to fluctuating interest rates and reduced mortgage affordability. Moreover, a review of private mortgages arranged by mortgage professionals in the last few years found that most transactions did not clearly show how the mortgage products were deemed suitable for consumers.
FSRA has set out the following outcomes so that:
- Mortgage professionals know their clients.
- Mortgage professionals know their products.
- Mortgage options meet client needs.
- Clients understand the recommended products.
- Mortgage products are suitable.
- Product recommendations are properly documented.
The Guidance reflects stakeholder input and clarifies that suitability assessment applies to mortgage renewals and appraisals should be conducted by designated / certified appraisers. Updates to Forms 1 and 2 enhance clarity, consumer-friendliness, and transparency about investment risks.
As always, mortgage professionals must put clients' interests first and ensure they are complying with their licensing obligations and requirements.
- Final Guidance: Mortgage Product Suitability Assessment
- Consultation feedback summary
- Revised Form 1 and Form 2
- Mortgage Broker Regulators' Council of Canada's Principles for Mortgage Suitability Assessments
Russ Courtney
Sr. Manager of Media Relations
Financial Services Regulatory Authority
C: 437-225-8551
Email: [email protected]
SOURCE Financial Services Regulatory Authority of Ontario
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