FSRA says brokerages failed to appoint principal and file required annual returns
The Financial Services Regulatory Authority of Ontario (FSRA) has revoked the licenses of 29 mortgage brokerages for failing to comply with key regulations.
The violations include not appointing a principal broker and/or neglecting to file the required 2021 Annual Information Return (AIR), according to the financial services regulator’s news release.
AIR filings are essential as they allow FSRA to monitor the mortgage market and identify risks to consumers. Ontario law mandates that all brokerages have an assigned principal broker.
“A brokerage is not authorized to operate without a principal broker," said Wendy Horrobin, head of licensing and risk assessment at FSRA. “Having a PB and filing the AIR are fundamental requirements that ensure the integrity and credibility of those operating in the sector. It is important that consumer confidence and protection be maintained at all times."
The FSRA said it made extensive efforts to contact the non-compliant brokerages and warn them of possible enforcement action.
"It's unfortunate that FSRA must take the step of revoking licenses," Horrobin said. "However, we are confident that brokerages have been afforded multiple opportunities to comply without ever providing a response.”
Brokers, agents, and principal brokers associated with these revoked brokerages are now prohibited from dealing in mortgages within Ontario.
Read more: Mortgage agent suspended over unethical practices
Last month, FSRA reminded Ontario mortgage professionals to complete the mandatory continuing education courses by March 31st to maintain their licenses. The course typically takes approximately five to seven hours to complete.
The private mortgage course, which typically takes about a week to complete, is also a prerequisite for attaining a Level 2 license.
Mortgage brokers (including principal brokers) who fail to complete the private mortgage course and successfully pass the exam will see their licenses downgraded to Level 1 status. This restricts them from dealing in private mortgages and investments for private investors and lenders.
Level 1 brokers must wait at least a year before retaking the course. In the case of principal brokers, rebuilding credentials could take up to three years, potentially causing significant business disruption.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
