Brokers are disappointed that the government’s move to tighten up the complaints process for banks does nothing to address the issue of unlicensed mortgage specialists or the fact their employers effectively control the process.
Brokers are disappointed that the government’s move to tighten up the complaints process for banks does nothing to address the issue of unlicensed mortgage specialists or the fact their employers effectively control the process.
But for brokers, it is still banks policing themselves.
“The banks have been getting away with it, quite frankly,” says Steve Garganis, a broker with Mortgage Intelligence, describing the current monitoring and complaint process. “Are these third party companies truly independent? I don’t think the new regulations go far enough, and I’m a little disappointed the government isn’t more clear in what they are trying to accomplish – creating true accountability.”
Ottawa announced tougher consumer protection regulations for banks this week, extending the monitoring and enforcement powers to the Financial Consumer Agency of Canada. While the banks will still be able to handpick their complaints ombudsmen, those third parties will be subject to greater oversight.
Mortgage professionals and consumer groups object to that, but what adds to the frustration of brokers is that mortgage specialists are operating without any real standards, at least none that mortgage brokers must uphold, argues Garganis.
“They are, in effect, mortgage brokers – without the accountability,” says Garganis. “There is nothing to keep them up to a standard. Mortgage specialists have no licensing requirement, no educational requirement – these new regulations have no real impact on this reality.”
The government isn’t addressing that with these changes billed as living up to transparency mandates.
“Our government is committed to protecting consumers,” said Finance Minister Jim Flaherty in the announcement. ”These new rules create a stronger, more independent consumer complaint system, by setting high, pro-consumer standards that all banks and authorized foreign banks must meet.”
RBC, TD withdrew from OBSI last year - continued on page 2
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Last year RBC and TD withdrew from the Ombudsman for Banking Services and Investments (OBSI) for banking complaints, choosing instead to hire and pay for a private for-profit supplier whose job is to rule on the merits of their customer complaints and claims for compensation. That supplier, ADRBO, was criticized by OBSI as only being directly accountable to the banks that hire and pay to rule on their market conduct. “If they do not sufficiently please their client – the banks – they can be fired,” said the OBSI in reaction to the RBC and TD switch to ADRBO.
Garganis questions the relationship between the banks and ombudsman-for-hire entities like OBSI and ADRBO.
“It is an obvious conflict of interest,” he says. “Although some of the most recent reports from OBSI do show that complaints are on the rise – at least the reporting is on the rise. But how many of those complaints are addressed and resolved?”
Garganis finds mortgage specialists are not held up to the same level of accountability that mortgage brokers must maintain.
“Brokers have a disclosure process and are far more accountable, especially since the Broker’s Act of 2008,” he says. “These mortgage ‘specialists’ are out there brokering deals for one bank – they are in effect mortgage brokers without the accountability. These new regulations offer nothing to keep them and the banks up to our standard.”
