Vehement calls from mortgage brokers for bank specialists to fall under the same regulatory regime have failed to convince Steven Del Duca, whose recommendations for the MBLAA review to Ontario’s Finance Minister called for the exemption to continue.
“At this point, there is no evidence to suggest there are regulatory gaps that are exposing consumers to harm,” Steven Del Duca wrote in his recommendation letter. “Provincial and federal governments and regulators should nonetheless be encouraged to share best practices with a view to pursuing harmonization where appropriate and continue to monitor this issue.
“As such, I recommend that no change be made at this time to the existing policy that exempts a financial institution and its employees.”
With an ever-increasing competition with bank employees for market share, it’s a decision that may not sit well with brokers.
REMIC -- having polled 1,000 brokers before sending its o Del Duca – indicated there were a large number of industry players who would like to see their banking counterparts subjected to the same regulations.
“Over 72 per cent of respondents indicated a belief that bank employees who act as mobile mortgage representatives also act or behave as mortgage brokers and therefore should be regulated by the MBLAA,” an official letter from REMIC to Steven Del Duca stated. “If a bank employee meets the definition of dealing in mortgages as defined in section 2 (1) of the MBLAA and is dealing in mortgages with lenders other than the bank that employs him or her, the bank employee is acting as a mortgage broker (and) by not being required to meet the same standards of disclosure borrowers are not afforded the same protection as those borrowers dealing with a mortgage agent or broker.”
And it is a sentiment shared by the Independent Mortgage Brokers Association of Ontario (IMBA), which provided its own recommendations to Del Duca.
“At present banks, treasury branches, credit unions, loan corporations, trust corporations or insurance corporations are permitted to act as mortgage brokers and compete with licensed brokers while being exempt from the act,” IMBA’s letter stated. “The present exemption not only places licensed industry members at a competitive disadvantage but also places the public at risk because of the unregulated brokerage activity.”
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