Questions and Answers: Mortgage Brokering Sector Supervision Focus 2020-2021

A: FSRA’s supervision of the mortgage brokering sector for the rest of the 2020-2021 fiscal year will focus on:

• Protecting vulnerable consumers from turning to inappropriate alternative lenders to obtain mortgages
• Ensuring consumers have the information they need to make informed decisions about mortgage-based investments and to remain informed about their investments
• Promoting good behaviour and deterring misconduct within mortgage brokerages
• Clarifying FSRA’s expectations of the sector, where appropriate

A: FSRA identified these key areas of focus after assessing the economic and industry challenges brought on by the COVID-19 pandemic, reviewing consumer complaints, and monitoring trends and risks in the sector.

FSRA found that:

• Consumers are finding it more difficult to obtain or maintain mortgages with traditional lenders due to economic and market uncertainty
• Market uncertainty has increased the risks associated with mortgage-based investments, making timely and accurate disclosure of material information to investors more important
• Businesses are experiencing challenges in remaining operational, potentially leading to fewer resources to maintain adequate compliance

A: To ensure mortgage brokering sector licensees meet regulatory requirements and treat consumers fairly, FSRA will:

• Review mortgage brokerages with a high proportion of the following activities:
  • private lending;
  • self-funding; and
  • serving individual consumers (borrowers and/or lenders).
• Survey Principal Brokers (PBs) about their supervisory approach, oversight, authority and resources
• Conduct compliance reviews on PBs who are at high risk of not being able to adequately supervise their brokerages based on survey responses, such as:
  • large number of brokers/agents;
  • large geographical coverage;
  • limited authority or resources.
• Ensure mortgage brokerages disclose timely, accurate and objective information about mortgage-based investments, such as non-qualified syndicated mortgage investments, to investors, especially non-designated ones, at the point of sale
• Ensure mortgage administrators provide timely, accurate and objective information to investors, especially non-designated ones, about known significant changes affecting the performance of their mortgage investments, such as:
  • changes to mortgage investment value;
  • changes to mortgage terms;
  • subsequent encumbrances;
  • material risks.
• Establish a line of communication with brokerages being reviewed
• Clearly articulate FSRA’s areas of concern and outline our compliance and best practice expectations of mortgage brokerages and administrators

A: Visit Approach for Promoting High Standards of Business Conduct in the Mortgage Brokering Sector to learn more about how FSRA protects the public interest and engages with licensees, and what to expect if we reach out to you.