The Financial Services Regulatory Authority of Ontario (FSRA) has released its annual Mortgage Broker Supervision Plan, noting it plans to ensure mortgage brokers and agents protect their clients and keep their interests in 2022-23.
FSRA said it will do this 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.
The actions will help FSRA ensure that consumers receive suitable mortgage products and investment recommendations that are easy to understand and meet their needs, FSRA said in a statement.
"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.
Private mortgage brokering a supervision focus
"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."
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.
It’s shifted its supervision and focus this year to help address new areas of consumer risk. This includes a nearly 20 per cent increase of new and potentially less experienced professionals in the market. As well, consumers are showing higher-than-average levels of financial vulnerability, with 22 per cent considered vulnerable compared to the provincial average of 20 per cent, said FSRA.
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.
