Potential Conflicts of Interest – Examples (Supplied by Industry Members)

Note that some of these examples are governed by specific regulations (e.g. disclosure of a brokerage’s roles; relationships with lenders; fees payable by others; see Ontario Regulation 188/08 - Mortgage Brokerages: Standards of Practice [New Window] , sections 18, 19 and 21.)
 
"What are examples of potential conflicts of interest that may exist?"
 
  1. The mortgage brokerage/broker/agent is related to the appraiser.
  2.  
  3. The lender is related to the mortgage broker/agent.
  4.  
  5. The lender is a family member of the borrower.
  6.  
  7. When the mortgage brokerage/broker/agent is also a lender.
  8.  
  9. If the mortgage broker or his/her spouse uses a self-directed RRSP to fund the mortgage for the borrower.
  10.  
  11. Receiving travel points, free holidays, or other incentives that are normally not available.
  12.  
  13. Favouring a lender due to monetary reasons.
  14.  
  15. When a mortgage broker/agent acts for both the borrower and lender.
  16.  
  17. If the mortgage broker/agent receives higher “bonus” commissions for working with a specific lender during a specific timeframe.
  18.  
  19. If the principal broker is also a real estate broker who is involved with listing and selling a property.
  20.  
  21. Placing business where a higher commission or gift is granted.
  22.  
  23. If a large portion of your business (over 50 per cent) is done exclusively with one party.
  24.  
  25. Sending a client to a lender because you received a free trip.
  26.  
  27. Accepting remuneration from both the borrower and lender without disclosure.
  28.  
  29. Recommending a mortgage with a higher interest rate due to a higher finder’s fee.
  30.  
  31. Not disclosing the different rates and terms offered by banks and how you will be compensated.
  32.  
  33. Failure to disclose to the borrower that you received a fee from another party (lender or investor).  

 
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