February 20, 2006 TORONTO – Finance Minister Dwight Duncan introduced legislation to replace the current Mortgage Brokers Act to improve consumer protection, enhance and modernize financial regulation and encourage greater competition and choice for consumers.
“The new Mortgage Brokerages, Lenders and Administrators Act is an important part of our government’s plan to improve Ontario’s economic advantage,” Duncan said. “Not only will this act benefit consumers, but it will support a new generation of economic growth through modernized financial services regulation.”
Ontario’s current Mortgage Brokers Act dates from the early 1970’s. Since then, many new mortgage products and services have appeared on the market. Obtaining financing to purchase a home is one of the biggest financial decisions a person will make, and more than one in four homebuyers now rely on mortgage brokers for help with their borrowing needs.
The new legislation would require individuals and businesses who deal in mortgages to be licensed by the Financial Services Commission of Ontario (FSCO). In addition, brokerages would be required to have a Principal Broker who will oversee conduct and act as the chief compliance officer for the organization. Other provisions in the legislation would modernize FSCO’s enforcement powers, remove restrictions for foreign ownership, and establish a separate license for those who administer mortgages, which involves handling investor funds.
“We need updated rules and modernized practices for our increasingly sophisticated financial services marketplace,” Duncan added. “With the role of mortgage brokers expanding, now is the right time to modernize Ontario’s regulatory framework to encourage competition and provide more choice for homebuyers.”
Additional Information including background, the Bill, Consultation Draft and a Consultation Paper are available at http://www.fsco.gov.on.ca/english/regulate/mortgagebrokers/new_law.asp
FSCO is an agency of the Ontario Ministry of Finance and regulates insurance, pensions, credit unions, caisses populaires, cooperatives, mortgage brokers, and loan and trust companies. Visit http://www.fsco.gov.on.ca for more information.