Quebec AMF Broker cheat sheet

In Quebec, mortgage brokerage is governed by the AMF under the Act respecting the distribution of financial products and services (ADFP); the AMF issues representative certificates and enforces compliance.

The AMF administers two distinct certification streams: mortgage brokerage (courtier hypothécaire) and mortgage lending (prêteur hypothécaire); each has separate training, exam, and supervision requirements.

A mortgage broker representative must hold a valid certificate issued by the AMF and must act through a registered firm; the firm is responsible for supervision and compliance.

Continuing education: certificate holders must complete the AMF-prescribed professional development units (PDUs) during each two-year reference period; failure to comply can lead to suspension or non-renewal.

The AMF requires registration of firms and representatives; changes in control, ownership, or business address must be disclosed to the AMF within prescribed timeframes.

The Mortgage Brokerage in Quebec regulation (Regulation respecting mortgage brokerage) sets conduct-of-business rules, including disclosure of compensation, conflicts of interest, and record-keeping.

The AMF may conduct inspections and investigations; it has disciplinary and administrative penalty powers, including fines, suspension, or revocation of certificates.

The distribution framework distinguishes between firms that are registered as mortgage brokers and those that are lenders; brokers must place clients with lenders they are authorized to deal with.

Record retention: brokers must keep client files and transaction records for at least five years after the end of the business relationship, unless a different period is specified.

Fixed-rate mortgage: interest rate is set for the term; payment is stable, but prepayment penalties may apply. Variable-rate mortgage: rate fluctuates with the lender's prime rate; payment may change or remain fixed with a variable term.

Open vs. closed mortgage: open permits prepayment at any time without penalty (usually higher rate); closed restricts prepayment and imposes penalties (often three months' interest or interest-rate differential).

Term vs. amortization: term is the length of the current mortgage contract (e.g., 5 years); amortization is the total period to pay off the loan (e.g., 25 years).

Loan-to-value (LTV) ratio = mortgage amount ÷ property value. In Canada, a down payment of at least 20% avoids default insurance; below 20% requires mortgage default insurance.

Gross debt service (GDS) ratio = (annual housing costs: mortgage principal and interest + property taxes + heating + 50% of condo fees) ÷ gross annual income. Total debt service (TDS) = (housing costs + all other debt payments) ÷ gross annual income.

Qualifying rate: for federally regulated lenders, uninsured mortgages must qualify at the greater of the contract rate or the benchmark rate (currently 5.25%); insured mortgages must qualify at the greater of the contract rate or the benchmark.

Down payment sources: in Canada, minimum down payment is 5% on the first $500,000 of the purchase price and 10% on the portion above $500,000 up to $1.5 million; properties over $1.5 million require 20% down.

Prepayment privileges: many closed mortgages allow 10-20% annual lump-sum prepayment and increased payments; exceeding limits triggers a penalty calculated on the greater of three months' interest or the interest-rate differential.

Bridge financing: short-term loan to cover the gap between the purchase of a new home and the sale of the existing one; typically higher interest and arrangement fees.

Know-your-client (KYC) rule: before recommending a mortgage, the broker must collect sufficient information on the client's financial situation, objectives, risk tolerance, and time horizon.

Suitability determination: the recommended mortgage must be suitable for the client's needs, considering affordability, flexibility, and cost over the term.

Affordability analysis: calculate GDS and TDS ratios; stress-test at the qualifying rate; assess residual income and credit history.

Disclosure of conflicts of interest: broker must disclose any commission, referral fee, or incentive received from a lender that could influence the recommendation.

Documentation: maintain a client file containing the needs analysis, product comparison, disclosure forms, and signed consent; the file must be retained per AMF rules.

Client communication: explain product features, risks, and costs in plain language; provide written disclosure of fees and penalties before the client commits.

Periodic review: the broker should reassess the client's needs at renewal or when there is a material change in circumstances (e.g., income change, rate change).

Referral to other professionals: when the client needs tax, legal, or estate advice, the broker should recommend consulting a qualified professional rather than providing such advice.

Vulnerable clients: extra care is required to ensure understanding and voluntariness; document the steps taken to verify capacity and suitability.

Fiduciary duty: the broker must act in the client's best interest, placing the client's interests ahead of the broker's own or the firm's.

Integrity and honesty: provide accurate information; never misrepresent products, rates, or penalties; correct errors promptly.

Confidentiality: protect client personal and financial information; disclose only with consent or as required by law.

Conflicts of interest: avoid or disclose any conflict; if a conflict cannot be avoided, obtain informed consent and document it.

Competence: only accept engagements within the broker's knowledge and skill; refer out when necessary; keep skills current through continuing education.

Fair dealing: treat all clients fairly, without discrimination; do not engage in high-pressure sales tactics or misleading marketing.

Professional boundaries: do not provide legal, tax, or accounting advice unless qualified; collaborate with other professionals when needed.

Compliance with laws: follow AMF regulations, privacy laws, anti-money-laundering rules, and lender policies; report suspected fraud or misconduct.

Advertising and marketing: must be accurate, not misleading, and identify the firm; avoid guarantees of approval or rates unless authorized.