1. Where does it say that a mortgage brokerage must have errors and omissions insurance?
   
   
2. FSCO claims my mortgage brokerage does not have errors and omissions insurance.  What evidence does FSCO have to support this claim?
   
   
3. Why didn’t FSCO contact me before suspending my mortgage brokerage’s licence?
   
   
4. My mortgage brokerage is currently not conducting mortgage business.  Why is errors and omissions insurance necessary? 
   
   
5. Does the mortgage brokerage’s interim licence suspension impact its mortgage brokers and agents?
   
   
6. Will my mortgage brokerage still need to pay the administrative monetary penalty if it gets errors and omissions insurance after receiving the notice?
   
   
7. Does FSCO post information on its enforcement activities online?
   
   
8. If my mortgage brokerage surrenders its licence, will FSCO cancel the administrative monetary penalty?
   
   
9. My mortgage brokerage received an e-mail/fax that said its licence is suspended.  Why is my mortgage broker/agent licence suspended as well?
   
   
10. Can I collect fees for mortgages I previously arranged, or start new deals while the mortgage brokerage’s licence is suspended?
    
    
11. The mortgage brokerage I work for had its licence suspended.  Can I transfer to another licensed mortgage brokerage and continue conducting mortgage business?
    
    
12. How long will the mortgage brokerage licence suspension be in effect?
    
    
13. What is an administrative monetary penalty?
    
    
14. How can my mortgage brokerage dispute the licence suspension and Notice of Proposal?

1. Where does it say that a mortgage brokerage must have errors and omissions insurance?

Subsection 7(4) of the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA) and section 42 of Ontario Regulation 188/08 - Mortgage Brokerages: Standards of Practice require all licensed mortgage brokerages to have errors and omissions insurance with extended coverage for fraudulent acts.

2. FSCO claims my mortgage brokerage does not have errors and omissions insurance.  What evidence does FSCO have to support this claim?

In October 2008, FSCO conducted errors and omissions insurance audits of all licensed mortgage brokerages.  Based on the insurance information that was provided by insurance companies, FSCO determined that your mortgage brokerage did not have errors and omissions insurance coverage from one of the approved insurance providers.

3. Why didn’t FSCO contact me before suspending my mortgage brokerage’s licence?

Before suspending a mortgage brokerage’s licence, FSCO staff attempted to contact each principal broker numerous times: 

• All principal brokers were advised via e-mail that FSCO would be conducting an errors and omissions insurance audit on October 15, 2008.
• FSCO e-mailed all principal brokers who did not appear to have the required errors and omissions insurance coverage. 
• If an e-mail did not get delivered to the principal broker’s e-mail address, FSCO staff sent a fax or registered letter to the mortgage brokerage.
• If a registered letter was undelivered or unclaimed, FSCO called the mortgage brokerage.

4. My mortgage brokerage is currently not conducting mortgage business.  Why is errors and omissions insurance necessary? 

Subsection 7(4) of the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA) and section 42 of Ontario Regulation 188/08 - Mortgage Brokerages: Standards of Practice require all licensed mortgage brokerages to have errors and omissions insurance with extended coverage for fraudulent acts.  This is a licensing requirement that went into effect on July 1, 2008.  This requirement is the same for all licensed mortgage brokerages and is not dependant on whether or not your mortgage brokerage is conducting mortgage business.  Having errors and omissions insurance is a condition of having a mortgage brokerage licence.

5. Does the mortgage brokerage’s interim licence suspension impact its mortgage brokers and agents?

Yes. When a mortgage brokerage’s licence is suspended, neither the brokerage nor its brokers and agents can conduct mortgage business in Ontario.  A licence suspension impacts all of the mortgage brokerage’s operations and transactions.  All operations must cease immediately and no transactions can be processed by the brokerage or any of its employees.  This means that the licences of the brokers and agents of the brokerage are also suspended.   

6. Will my mortgage brokerage still need to pay the administrative monetary penalty if it gets errors and omissions insurance after receiving the notice?

The Superintendent has issued a Notice of Proposal to impose an administrative monetary penalty because your mortgage brokerage was non-compliant with the requirement to have errors and omissions insurance.  You have a legal right to a hearing should you wish to dispute the penalty, if you request one within the time stated in the notice.  If so, it will be up to the Financial Services Tribunal to determine the penalty.  Otherwise, you are required to pay the penalty.

7. Does FSCO post information on its enforcement activities online?

FSCO posts information about its enforcement activities on its Monitoring and Enforcement Online web page.  Monitoring and Enforcement Online provides information on FSCO’s prosecution activities, the decisions arising out of the hearings conducted by the Financial Services Tribunal, and other regulatory activities that help ensure consumer confidence in the financial services sectors that FSCO regulates.

If a mortgage brokerage has its licence suspended, FSCO will also update the information on Licensing Link – FSCO’s online registry of licensed mortgage brokerages.

8. If my mortgage brokerage surrenders its licence, will FSCO cancel the administrative monetary penalty?

No. You have a legal right to a hearing should you wish to dispute the penalty, if you request one within the time stated in the notice.  Otherwise, you are required to pay the penalty.

9. My mortgage brokerage received an e-mail/fax that said its licence is suspended.  Why is my mortgage broker/agent licence suspended as well?

FSCO has suspended your mortgage brokerage’s licence because the brokerage did not comply with requirement to have errors and omissions insurance.  Errors and omissions insurance is a licensing requirement under subsection 7(4) of the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA) and section 42 of Ontario Regulation 188/08 - Mortgage Brokerages: Standards of Practice. 

Your mortgage brokerage was given several chances to comply with this requirement, but did not comply.  Since the mortgage brokerage’s licence was suspended, your mortgage broker/agent licence is automatically suspended by law, under subsection 17(3) of the MBLAA.

10. Can I collect fees for mortgages I previously arranged, or start new deals while the mortgage brokerage’s licence is suspended?

You can collect fully earned fees from previously arranged mortgage transactions, as this activity is not considered arranging, dealing or trading in mortgages.  However, the mortgage brokerage cannot complete mortgage transactions that are currently in progress.  Nor can it accept any new business.

11. The mortgage brokerage I work for had its licence suspended.  Can I transfer to another licensed mortgage brokerage and continue conducting mortgage business?

Your mortgage broker/agent licence is currently suspended because your mortgage brokerage’s licence is suspended.  If you choose to transfer to another licensed mortgage brokerage, your mortgage broker/agent licence suspension will be lifted when you become authorized by another mortgage brokerage to deal/trade in mortgages on its behalf.

12. How long will the mortgage brokerage licence suspension be in effect?

An Interim Order to suspend the licence of your mortgage brokerage was issued on February 17, 2009.  It is immediately in effect for 15 days from the date of issue. 

A Notice of Proposal to revoke the mortgage brokerage’s licence was also issued on February 17, 2009. If your mortgage brokerage does not respond within 15 days, its licence will be revoked.

The interim order suspension will be lifted if:

• FSCO receives complete details of the mortgage brokerage’s errors and omissions insurance,
• FSCO verifies the insurance coverage through an approved insurance provider, and
• the mortgage brokerage agrees to Minutes of Settlement.

If the mortgage brokerage does not provide FSCO with verifiable details of its errors and omissions insurance, or does not provide the completed Surrender Form, it can choose to request a hearing before the Financial Services Tribunal.  In this case, the Superintendent will extend the interim order to suspend the licence of the mortgage brokerage until the Financial Services Tribunal renders its decision.

13. What is an administrative monetary penalty?

Subsection 7(4) of the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA) and section 42 of Ontario Regulation 188/08 - Mortgage Brokerages: Standards of Practice require all licensed mortgage brokerages to have errors and omissions insurance at all times.

An administrative monetary penalty may be imposed under section 39 of the MBLAA and Ontario Regulation 192/08, in order to promote compliance with requirements under the MBLAA and to prevent a person or entity from deriving, directly or indirectly, any economic benefit as a result of contravening or failing to comply with a requirement established under the MBLAA.

Your mortgage brokerage has received an order to pay an administrative monetary penalty for not complying with the legal requirement to have errors and omissions insurance.  It is an order of the Superintendent of the Financial Services Commission of Ontario (FSCO).  FSCO is responsible for the regulation of the mortgage brokering industry.  You will be invoiced to facilitate payment of the penalty.  Failure to pay the administrative monetary penalty will affect your brokerage’s eligibility to hold a licence, and result in collection efforts against you.

14. How can my mortgage brokerage dispute the licence suspension and Notice of Proposal?

Information on how to dispute the administrative monetary penalty is included in the Notice of Proposal.  Please ensure you note the timing requirements.  If you choose to request a hearing before the Financial Services Tribunal, with respect to the administrative monetary penalty, the Superintendent will extend the Interim Order to suspend the mortgage brokerage’s licence until the Financial Services Tribunal renders its decision.