Under the Mortgage Brokerages, Lenders and Administrators Act, 2006 (the Act), each mortgage brokerage must appoint one Principal Broker. The Principal Broker’s job is to be the chief compliance officer for the mortgage brokerage.
A mortgage brokerage must have a Principal Broker at all times. In addition, a mortgage brokerage may only have one Principal Broker at a time.
To become a licensed Principal Broker in Ontario, you must be a licensed mortgage broker authorized by the mortgage brokerage to deal or trade in mortgages on its behalf. In addition:
- If the mortgage brokerage is a corporation, you must be a director or officer of the corporation.
- If the mortgage brokerage is a partnership (other than a limited partnership), you must be a partner.
- If the mortgage brokerage is a limited partnership, you must be a general partner, or a director or officer of a corporation that is a general partner.
- If the mortgage brokerage is a sole proprietorship, you must be the owner or sole proprietor.
According to O. Reg. 410/07: Principal Brokers: Eligibility, Powers and Duties, the Principal Broker’s duties include:
- Acting as the chief compliance officer for the mortgage brokerage.
- Ensuring that the brokerage and each mortgage broker and agent, follow all of the regulations and requirements that apply under the Act.
- Taking reasonable steps to deal with anyone working for the brokerage who does not follow the Act.
- Reviewing the brokerage’s policies and procedures to ensures it follows the Act.
- Reviewing the mortgage brokerage's policies and procedures to ensure it follows the Act, and that mortgage brokers and mortgage agents are adequately supervised.
- Signing and approving any trust account reconciliation statements prepared by the brokerage to confirm that they are accurate.
As a Principal Broker, you are responsible for taking reasonable steps to ensure that each agent is authorized to deal or trade in mortgages on behalf of the brokerage. You also need to make sure that all of the brokerage’s agents are complying with every requirement under the Act.
If your brokerage does not take reasonable steps to deal with contraventions of the Act, you may be subject to enforcement action.
To become a Principal Broker, you must first become a licensed mortgage broker. In Ontario, you need to apply for a licence with the Financial Services Regulatory Authority of Ontario (FSRA). For information on the necessary requirements and how to apply, see How to become a mortgage broker.
Principal Broker licences will expire and must be renewed each year before March 31 or transferred to another broker. If there are no other licensed brokers in the brokerage to be appointed as Principal Broker, the brokerage licence will be suspended. For information on how to renew your licence, see How to renew my mortgage broker licence.