The Financial Services Commission of Ontario has been conspicuously silent on the issue
In many ways, mobile mortgage specialists are at a disadvantage because they work on pure commission, but the pressures placed upon them also trickle down to borrowers, many of whom are talked into unsuitable mortgages.
According to Karen Matthey, co-owner of The Mortgage Professionals in the Verico network, mobile mortgage specialists are subject to too little oversight.
“My biggest issue with mobile mortgage specialists is if you’re going to have a sales force that is paid by commission, from a regulatory perspective why are they treated differently to us? Why aren’t they required to get a mortgage agent’s license? Why aren’t they required to have the same disclosure requirements that we do, to have the same onus to protect the customer that we do, in terms of choosing the best mortgage from their perspective? That’s my biggest issue because I don’t think it’s a level playing field.”
Earning commission without a base salary does little to protect borrowers from road reps whose primary concern is earning a living, not putting them into financially-sound mortgages.
“I think when you have someone who’s on salary at the bank, you can argue a little stronger that—yes, they’re incentivized to make money for the bank—but they’re less financially incentivized by each deal, but when you have a commission sales rep for a bank, why are they treated differently than us?” said Matthey.
“They should have the same requirements for continuing education, the same requirements to protect the consumer, they should have the same requirement to fill out paperwork that says they’ve deemed that the mortgage is suitable for the customer, and why.”
Matthey’s position is supported by DLC Mortgage Centre broker Daniel Johanis, who believes mobile mortgage specialists should be regulated by FSCO
“I think they should be regulated,” he said. “By not being regulated by FSCO, I wouldn’t necessarily say it’s the Wild Wild West, but there should be some accountability and oversight. It seems a little more difficult for them to make a living and that’s where the conflict comes into play. Are you putting clients’ best interests first, or are you trying to close a sale for the sake of a closing sale?”
Mobile mortgage specialists have significantly fewer products they can sell, which—in addition to subsisting entirely on commission—is a hindrance, so they have a penchant for aggressively upselling and cross-selling other products, like life insurance.
“Banks are at a disadvantage when it comes to offering products that may be in clients’ best interests because, compared to mortgage brokers having over 50 lenders at their disposal, a bank only has one suite of product,” said Johanis. “With road reps, their tactic is basically, ‘We’ve got all the sales papers out and ready—just sign.’ It’s almost like a done deal.”
Johanis is familiar with mobile mortgage specialists’ sales tactics because they used to visit his family home.
“I don’t do the whole in-house signing,” he said. “In our industry, we can do a lot of stuff remotely, and it’s also liability concern going into someone’s home. There’s also the pressure of sitting down and I’ve seen it in my own experiences with my family; there’s a little bit more high sales pressure, and it’s hard to get someone out of your home when they’re not going to take ‘no’ for an answer.”
