Broker network EVP on preparing for the new requirements
The introduction of new regulatory requirements for mortgage brokers across Canada is inching ever nearer, with October 11 marking the date when changes imposed by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) will come into effect. 
Those rules – under which brokerages will face various obligations including implementing a new compliance program and rigorously monitoring and reporting certain transaction types – have seen top networks and broker houses ramp up preparation since they were first announced last year.
Initially, the changes may have been perceived as simply small tweaks to how brokers process ID and verify their clients. But digging deeper into the new rules revealed a significant effort required across the board to get up to speed with FINTRAC’s expectations, according to Dave Teixeira (pictured top), executive vice president at DLCG Mortgage Group.
The changes will encompass much more than more stringent verification of clients, Teixeira noted. “It’s risk assessment, it’s client monitoring for up to five years. Every year, you have to do an effectiveness audit,” he told Canadian Mortgage Professional. “There’s all sorts of pieces here.”
The first step, he said, was ensuring the company’s agents across the country were apprised of the new lay of the land – no small feat, with over 9,000 from coast to coast. Communication with FINTRAC on the regulations was also paramount, as well as developing and rolling out comprehensive training and technology offerings for agents and brokers.
Mortgage sector falling in line with regulation of other industries
The new requirements have been greeted with something of a mixed reaction within the industry, although Texeira noted that the same processes have long been in place in other industries including banking and wealth management.
He suggested compliance with the changes would eventually become second nature to the industry, and remained optimistic about how it will adjust to the new era. “It’s that real protection in there. We always tend to lean into the regulations,” he said.
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— Canadian Mortgage Professional Magazine (@CMPmagazine) September 30, 2024
“We might not always agree with them and we’ll express our concerns, but by having a close relationship with the regulators we find that we always come out ahead and that’s a benefit to our agents and owners.”
How long will it take for brokerages to adjust to the new reality?
The new regulatory framework marks a significant change to the way brokers are required to run their shops – but they’re far from the first big adjustments mortgage professionals have faced when it comes to oversight.
In British Columbia, the province’s regulator (now the BC Financial Services Authority or BCFSA, then known as FICOM or the Financial Institutions Commission) changed its Form 10 disclosure rule in 2016, requiring brokers to state how much they’re paid, while B-20 guidelines the following year by the national banking regulator hiked mortgage qualification requirements for borrowers.
Those changes were met with a strong reaction within the industry, but have since become accepted as part of the job – and that’s also likely to be the case with FINTRAC’s new framework, Teixeira said. “We [the industry] are kind of put off by [change] because it’s extra work and it’s new and it’s different,” he said, “but then within six to 12 months, it’s just like gravity. It’s just part of the process.
“So what we’re trying to do is best arm our agents and owners to have the information and the training to be in the best position possible.”
Preparing for October 11 is best described as a sprint within a marathon, he said. The sprint entails getting training, communication and technology solutions in place for that date, while the marathon continues afterwards with the requirement to provide annual training and help brokerages meet audit requirements.
It remains to be soon how smoothly the wider industry will adjust to the new rules, and whether any teething problems will emerge – although Teixeira emphasized that DLCG is ready. Ultimately, though, he said the changes are to be welcomed. “I think these regulations are good… and it elevates our industry,” he said.
“It shows that we’re professionals. We don’t run from the responsibility. No-one should want to aid in money laundering, no-one should want to aid a terrorist organization. So these new procedures might feel a bit onerous at the start, but the intent is to stop really bad things from happening – and if we can play a role in that, we should.”
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