Association lobbies for legislative change

A provincial association is pushing for an update to regulations surrounding advance fees, including cancellation fees

Not to be left behind in the growing discussion about cancellation fees, one industry association is calling for reformation to provincial law.

“The MBABC is continuing its efforts to seek legislative change to an outdated mortgage broker licensing statute in BC (that prohibits advance fees),” Samantha Gale, CEO of the Mortgage Brokers Association of British Columbia, told “The Mortgage Brokers Act is still on the BC legislative agenda.”

Brokers in British Columbia are prohibited from charging advance fees, which include cancellation fees.

And as the discussion – and debate -- around cancellation fees has grown, the MBABC is renewing its effort to lobby the provincial government to update its policy on these, and other, advance fees.

The association shared with a letter previously sent to Financial and Corporate Sector Policy Branch of the Ministry of Finance arguing in favour of reformation to section 5 of Business Practices and Consumer Protection Act, which prohibits the use of advance fees.

In it, the MBABC argues brokers may  be  reluctant  to  take  on difficult  residential  mortgage  clients when their  fee  is  contingent  on  their  application actually  being  approved  and  funded.

“Often mortgage files require many hours of preparation, document management and negotiation,” the association writes. “Sometimes mortgage commitments are  obtained  by  mortgage  brokers  after  they  have  invested  significant amounts of time into the file, but the client will eventually opt for alternative financing or decline  the  offered  financing – this  can  happen  even  at  the  last  minute,  just  prior  to closing.”

In these cases, the MBABC argues brokers, under the current legislation, have no way of collecting compensation for work already done. 

“All mortgage brokers who deal in residential mortgages are effectively prohibited from taking advance fees in order to assist in the prevention of a small number of fraudsters from taking advantage of the public,” the association writes. “Most professionals, including lawyers, accountants and realtors are able by contract to negotiate advance fees.”