FSRA proposes suspending principal broker and $100,000 fine
The Financial Services Regulatory Authority (FSRA) has taken enforcement action against Forest City Funding (FCF) and its principal broker over allegations the company provided false information and facilitated dishonest mortgage dealings by borrowers.
In a notice, the FSRA stated it is proposing to suspend William Handsaeme's mortgage broker license for one year. After the suspension, it wants to amend his license to prohibit him from being designated as a principal broker at any Ontario firm for three years and bar him from supervisory roles or signing mortgage disclosure documents during that period.
The regulator also alleged FCF "contravened the Mortgage Brokerages, Lenders and Administrators Act" by "giving false or deceptive information and documents when dealing in mortgages" and "acting in circumstances where it ought to have known that by acting it was being used by a borrower to facilitate dishonesty."
The regulator is proposing to impose 10 administrative penalties totalling $100,000 against FCF – five $10,000 fines for the false information allegations and five more $10,000 fines related to the dishonest borrower facilitation claims.
A further $10,000 penalty is being proposed against Handsaeme personally for "causing Forest City Funding Inc. to contravene the Act."
Read next: Ontario mortgage broker fined $10k for providing false information
"FSRA alleges that Handsaeme contravened section 3 of Ontario Regulation 187/08 by causing FCF to engage in the conduct above and that Handsaeme is not suitable to be licensed under the Act," the notice read.
Both FCF and Handsaeme have requested a hearing before the provincial Financial Services Tribunal regarding the FSRA's proposed enforcement actions.
The financial watchdog recently released a set of best practices for brokers that aims to raise professionalism in the mortgage brokering sector. The guidance comes after a 2020 survey revealed that only half of principal brokers at large brokerages with over 100 licensees had the authority to influence their firm's compliance culture.
“Through properly discharging their statutory duties, principal brokers, regardless of whether they operate as owners of the brokerage or as part of the brokerage’s control function, play an important role in preventing poor or unfair outcomes for consumers by establishing a strong conduct and compliance culture for their brokerage, brokers and agents,” FSRA said.
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