The Financial Services Regulatory Authority of Ontario (FSRA) has published a final guidance Code of Conduct for mortgage professionals in Ontario working in the mortgage brokering sector. The Code is aimed at pushing for high standards of business conduct in order to safeguard interests of those who engage mortgage brokering services. The principles of the Code mostly represent the already existing conduct requirements of the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA) and its guidelines. Besides, the Code also includes complementary practices for consumer protection.
The entities regulated by FSRA include mortgage agents, mortgage brokers, mortgage administrators, and mortgage brokerages. The code, while giving guidelines on conducting mortgage brokering and related activities, warrants the licensees to: Provide products and services that are suitable for each client; Provide services in a transparent and effective manner; and Comply with all applicable legal and regulatory requirements. The code also lays down the conduct clients can expect of the mortgage brokering licensees. Laying down these rules: Raises awareness of consumers’ rights when dealing with a licensee; and Provides consumers with a reference / education tool for appropriate conduct.
Moreover, these clients can always refer to the code to know more about their rights and privileges, and also to get a fair idea about how the services should be.
FSRA mandate: Â Via the code FSRA has a goal to achieve some statutory objectives pertaining to the MBLAA regulations and these include: Contributing to public confidence in the mortgage brokering sector; Monitoring and evaluating trends in the mortgage brokering sector; Cooperating and collaborating with other regulators where appropriate; Promoting high standards of business conduct; Detering deceptive or fraudulent conduct, practices, and activities in the mortgage brokering sector; Protecting the rights and interests of consumers; and Fostering a strong, sustainable, and innovative sector.
To achieve these statutory objectives, the FSRA uses a general supervision approach which can be listed as follows:
Proactive, Risk-based Approach – FSRA focuses its supervision on high-risk licensees and their activities. Focus on Governance – FSRA expects brokerages and administrators to have effective internal controls and supervision to promote a strong compliance culture and mindset among licensees to identify and manage risks arising from their dealings with consumers. Proportionate Approach to Discipline – FSRA uses a range of compliance and enforcement tools to influence marketplace behaviour. The tools used depend on, for example, the nature and extent of risks to consumers, mitigating actions taken by licensees, and past supervisory findings.
To ensure that all the processes and practices help raise licensees’ awareness of, and compliance with, the Code, the following are done:
All applicants for licensing and renewal are required to acknowledge that they are aware of and understand the Code. Principal Brokers are required to declare, as part of the ‘Mortgage Brokerage Declaration of Compliance’, that the brokerage has implemented policies and procedures to ensure that the brokerage and its agents and brokers adhere to the MBLAA requirements reflected in the Code. Brokerages and administrators should incorporate the principles of the Code into their policies and procedures. Brokerages and administrators should record non-adherence to the Code and identify and implement actions to rectify non-adherence. This information should be made available to FSRA upon request. Â
If you are shopping for a mortgage and want to know anything about this code, get in touch with LendX.
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