FSCO's Mortgage Brokering Product Suitability Review
Mortgages tend to represent the single largest financial commitment made by many consumers. It is critical, therefore, that a mortgage suits a borrower’s needs and circumstances. Unsuitable mortgages can have a devastating impact, not only on the borrower’s finances, but ultimately on the economy.
Governments and regulators around the world want to ensure that consumers are receiving the appropriate levels of information and advice when they are purchasing financial services or products. Accordingly, the Financial Services Commission of Ontario (FSCO), in support of the Mortgage Broker Regulators’ Council of Canada’s (MBRCC) Mortgage Product Suitability Review Committee, is conducting a review to understand and assess the process that mortgage brokers use when determining suitable mortgage options for clients.
The review will focus on new residential mortgage transactions including any purchase, refinance or renewal that results in a new application with a lender.The review will also consider the actions that mortgage brokers are taking to support the financial literacy of their clients. This is primarily an information-gathering exercise for the MBRCC, FSCO and other participating regulators.
As the working group for the MBRCC’s Mortgage Product Suitability Committee, FSCO engaged mortgage broker industry stakeholders in a consultative process. The consultation was intended to obtain a clearer understanding of the process Ontario mortgage brokers/agents use when presenting options and advice regarding mortgage products to clients.
FSCO will be launching an online questionnaire on January 20, 2014, to gather information on practices of mortgage brokers when determining suitable mortgage options for clients.
Mandatory Completion of Questionnaire
You may be selected as part of a random or targeted sample of mortgage brokers to complete the questionnaire. Selected brokers will be notified via email at that time. It is important to note that if you are selected, completion of the questionnaire is mandatory, pursuant to section 29 of the Mortgage Brokerages, Lenders and Administrators Act. The selected mortgage brokers must complete the questionnaire by February 19, 2014. Failure to respond could result in regulatory action.
Furthermore, FSCO will also be selecting a sample of brokers for follow-up assurance visits, in order to check the reliability of the information provided by brokers in response to the questionnaire. Therefore, it will be important to retain any material or records you used to support your questionnaire responses.
FSCO anticipates your cooperation and thanks those that have participated in the consultative process.