One leading network head addresses the industry regarding proposed regulatory changes
By Gary Mauris
There has been much discussion recently about the proposed changes to the form 10 by FICOM, British Columbia’s regulator. Many of the industry leaders including Lenders, Originators and Associations have come together to discuss the consequences of these potential changes.
First off, this is not a Commission disclosure issue. We all universally agree that transparency, regulating meaningful disclosure and enforcement are critically important for our Industry and for the public at large.
We believe that FICOM proposed changes to the Form 10 are with their best intentions in mind and these intentions are for consumer protection.
Having said that, we believe that the unintended consequences of their proposed changes could have very negative consequences to all Canadians.
Let me explain. Ottawa has worked hard to support business/industry and is very concerned about monopolies. Our political leaders work very hard to regulate and manage industry so that monopolies cannot dictate and strong arm Canadians, robbing them of competitive pricing, freedom of choice in products and unbiased advice.
Unfortunately we lack unification and conformity in regulations throughout Canada. What that means in this situation is that FICOM does not regulate the banks but does regulate the credit unions and mortgage broker channel, making the playing field uneven.
Imagine this: FICOM continues with this mandate and regulates that all mortgages originated via the mortgage broker channel have to disclose their exact compensation, where the bank staff and their MMSF (and other lenders) do not.
Instantly there becomes a significant advantage to the banks in Canada as their staff and mobile mortgage sales force start advertising and start saying “why would you use a mortgage professional and pay a fee when you can get your mortgage through us and its free?”
Now although the bank’s mobile mortgage sales forces are compensated similarly, and are compensated from the lender as we are, they do not have to disclose their compensation, creating confusion for Canadians and a significant advantage to the banks.
Instantly the Canadian mortgage channel starts shrinking. Our market-share starts constricting and Canadians unaware of the facts have less choice, less competitiveness in pricing and less freedom in their decisions around the most important investment many of them are ever going to make.
Issue recap
Continued...
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We believe in meaningful disclosure. We believe these changes will result in unintended consequences such as:
Canadians having less choice, higher pricing, less options in choice of mortgage products and less flexibility in who they choose to deal with.
This creates greater borrower confusion, misunderstanding and distraction from the far more important terms and the conditions of their mortgage.
Distortion of the borrower’s perception of costs.
Borrowers wrongly concluding that it is more expensive to use a mortgage broker than an Institutional lender.
This will disadvantage the broker channel in comparison with lenders who do not have to make a similar disclosure of costs.
Who does this affect?
Most importantly - Hard working Canadian families who are unaware of this uneven playing field, who will immediately have less choice, higher mortgage costs, less competition to the banks and lack of freedom with their mortgage options.
This will affect every Mortgage professional in Canada and their families. Although this is a BC initiative, FICOM has stated they would like to be leaders in this initiative and hope that other regulators will follow. We support equal regulation inclusive of banks, brokers and other channels - but not ones that have little to no consultation or a clear understanding of the consequences.
Lenders - If you currently do business with the mortgage broker channel this will affect you and all of your staff.
Suppliers, technology, insurers and all others who currently work within our Industry and are supporters of the Mortgage origination channel.
How can the Industry help?
Don’t downplay the significance of this issue. It is not overblown or insignificant. it is a very real challenge that we will have to work through with FICOM to come up with a solution that works for all.
Reach out to MPC (Mortgage Professionals Canada, formerly CAAMP) to let them know you would like to be part of our response.
Reach out to your Network that you are currently licensed under for further direction as all major networks are unified and working together.
Please be very positive in your response and online forums, as it’s important to respect and appreciate the regulators and their position. Rhetoric, rude commentary, indifference and anger works against us and is not representative of this incredible industry and who we are, regardless of your frustration levels.
Good public policy comes from proper consultation with industry, and cannot be rushed in order to ensure consequences are fully understood.
There has been much discussion recently about the proposed changes to the form 10 by FICOM, British Columbia’s regulator. Many of the industry leaders including Lenders, Originators and Associations have come together to discuss the consequences of these potential changes.
First off, this is not a Commission disclosure issue. We all universally agree that transparency, regulating meaningful disclosure and enforcement are critically important for our Industry and for the public at large.
We believe that FICOM proposed changes to the Form 10 are with their best intentions in mind and these intentions are for consumer protection.
Having said that, we believe that the unintended consequences of their proposed changes could have very negative consequences to all Canadians.
Let me explain. Ottawa has worked hard to support business/industry and is very concerned about monopolies. Our political leaders work very hard to regulate and manage industry so that monopolies cannot dictate and strong arm Canadians, robbing them of competitive pricing, freedom of choice in products and unbiased advice.
Unfortunately we lack unification and conformity in regulations throughout Canada. What that means in this situation is that FICOM does not regulate the banks but does regulate the credit unions and mortgage broker channel, making the playing field uneven.
Imagine this: FICOM continues with this mandate and regulates that all mortgages originated via the mortgage broker channel have to disclose their exact compensation, where the bank staff and their MMSF (and other lenders) do not.
Instantly there becomes a significant advantage to the banks in Canada as their staff and mobile mortgage sales force start advertising and start saying “why would you use a mortgage professional and pay a fee when you can get your mortgage through us and its free?”
Now although the bank’s mobile mortgage sales forces are compensated similarly, and are compensated from the lender as we are, they do not have to disclose their compensation, creating confusion for Canadians and a significant advantage to the banks.
Instantly the Canadian mortgage channel starts shrinking. Our market-share starts constricting and Canadians unaware of the facts have less choice, less competitiveness in pricing and less freedom in their decisions around the most important investment many of them are ever going to make.
Issue recap
Continued...
#pb#
We believe in meaningful disclosure. We believe these changes will result in unintended consequences such as:
Canadians having less choice, higher pricing, less options in choice of mortgage products and less flexibility in who they choose to deal with.
This creates greater borrower confusion, misunderstanding and distraction from the far more important terms and the conditions of their mortgage.
Distortion of the borrower’s perception of costs.
Borrowers wrongly concluding that it is more expensive to use a mortgage broker than an Institutional lender.
This will disadvantage the broker channel in comparison with lenders who do not have to make a similar disclosure of costs.
Who does this affect?
Most importantly - Hard working Canadian families who are unaware of this uneven playing field, who will immediately have less choice, higher mortgage costs, less competition to the banks and lack of freedom with their mortgage options.
This will affect every Mortgage professional in Canada and their families. Although this is a BC initiative, FICOM has stated they would like to be leaders in this initiative and hope that other regulators will follow. We support equal regulation inclusive of banks, brokers and other channels - but not ones that have little to no consultation or a clear understanding of the consequences.
Lenders - If you currently do business with the mortgage broker channel this will affect you and all of your staff.
Suppliers, technology, insurers and all others who currently work within our Industry and are supporters of the Mortgage origination channel.
How can the Industry help?
Don’t downplay the significance of this issue. It is not overblown or insignificant. it is a very real challenge that we will have to work through with FICOM to come up with a solution that works for all.
Reach out to MPC (Mortgage Professionals Canada, formerly CAAMP) to let them know you would like to be part of our response.
Reach out to your Network that you are currently licensed under for further direction as all major networks are unified and working together.
Please be very positive in your response and online forums, as it’s important to respect and appreciate the regulators and their position. Rhetoric, rude commentary, indifference and anger works against us and is not representative of this incredible industry and who we are, regardless of your frustration levels.
Good public policy comes from proper consultation with industry, and cannot be rushed in order to ensure consequences are fully understood.
