BC’s regulating body put out a new interpretation of regulation Form 10, requiring brokers to state how much they’re paid
Three industry insiders give their views on this contentious issue.
Walid Hammami, Broker, Dominion Lending Centres:
“FICOM never disclosed the real reasons behind their actions. If they want to protect the consumer, then they should be unbiased. FICOM is afraid that the broker is redirecting the deal to the lender who pays most, and that could be to the disadvantage of the client.
But what do banks do when they sell you a Visa or an investment? Do they direct you to the product where they make the least money? Do they sell you the Visa with fees or without fees? Do they sell GICs or mutual funds? I remember one VP in a bank I worked for threatening to downgrade financial planners to regular account managers if they don’t sell more mutual funds.”
Tony Piattelli, Mortgage associate, Quantus Mortgage Solutions:
“Our ability to provide advice to clients as to which mortgage option to take has been negatively impacted by the changes in mortgage rules, which effectively put most of our clients into five-year fixed-rate mortgages, given the myth that variable rate mortgages are more risky.
FICOM would do better to fight against the rule changes that create this imbalance and influence real change. Since this objective has been in the works, I’ve asked my new clients whether they would want to know how much I make on their deal, and none of them care as they aren’t paying it. Focus on real change that actually has implications for moving the industry forward instead of building barriers.”
Audrey Wamboldt, Broker/owner, Approved Mortgage Professionals:
“I fail to understand why disclosing a broker’s compensation reflects better advice to the consumer. By simply saying I am earning X amount of dollars, it doesn’t put it in any context. How does the consumer know if there are lenders who pay less of a finder’s fee but offer more benefits or a lower rate?
If we are charging a fee over and above the lender’s comp, then we should have to always acknowledge that and get the agreement in writing. If we are paid by the lender only, then we acknowledge we are being compensated by their choice of lender in writing to our clients. Any fee over and above that should be spelled out completely and disclosed to the borrower.”
Walid Hammami, Broker, Dominion Lending Centres:“FICOM never disclosed the real reasons behind their actions. If they want to protect the consumer, then they should be unbiased. FICOM is afraid that the broker is redirecting the deal to the lender who pays most, and that could be to the disadvantage of the client.
But what do banks do when they sell you a Visa or an investment? Do they direct you to the product where they make the least money? Do they sell you the Visa with fees or without fees? Do they sell GICs or mutual funds? I remember one VP in a bank I worked for threatening to downgrade financial planners to regular account managers if they don’t sell more mutual funds.”
Tony Piattelli, Mortgage associate, Quantus Mortgage Solutions:“Our ability to provide advice to clients as to which mortgage option to take has been negatively impacted by the changes in mortgage rules, which effectively put most of our clients into five-year fixed-rate mortgages, given the myth that variable rate mortgages are more risky.
FICOM would do better to fight against the rule changes that create this imbalance and influence real change. Since this objective has been in the works, I’ve asked my new clients whether they would want to know how much I make on their deal, and none of them care as they aren’t paying it. Focus on real change that actually has implications for moving the industry forward instead of building barriers.”
Audrey Wamboldt, Broker/owner, Approved Mortgage Professionals:“I fail to understand why disclosing a broker’s compensation reflects better advice to the consumer. By simply saying I am earning X amount of dollars, it doesn’t put it in any context. How does the consumer know if there are lenders who pay less of a finder’s fee but offer more benefits or a lower rate?
If we are charging a fee over and above the lender’s comp, then we should have to always acknowledge that and get the agreement in writing. If we are paid by the lender only, then we acknowledge we are being compensated by their choice of lender in writing to our clients. Any fee over and above that should be spelled out completely and disclosed to the borrower.”
