The Referral Fee and the Unlicensed 'Assistant'
Dev has been a licensed mortgage agent for three years. A real estate colleague, Tanya, refers a client to him. Tanya asks Dev to pay her a $1,500 'marketing fee' out of his commission once the deal closes, saying she has done this with other agents and it is 'standard.' Separately, Dev's cousin Amir, who is not licensed, has been helping Dev by calling clients to collect documents, answering questions about rates, and sending pre-approval emails from Dev's account. Amir does not receive a salary but Dev pays him $300 per closed file. Dev's brokerage principal broker has not been told about either arrangement. A client has now complained that 'the person who emailed me about my rate' gave incorrect advice.
1. Analyze the two arrangements against Ontario mortgage brokering rules and identify the compliance problems.
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The referral fee to Tanya. Paying a fee for the referral of a mortgage client engages the licensing framework. A person who deals in mortgages or trades in mortgages for compensation generally must be licensed, and fees for referrals of mortgage business are restricted. The label 'marketing fee' does not change the substance: if the payment is really for sending a client, it raises a referral-fee issue. Dev should not agree to it without confirming with his principal broker that the arrangement is permitted and properly disclosed to the client.
Amir's role. This is the more serious problem. Amir is unlicensed but is performing activities that require a licence: discussing rates, answering client questions about mortgage products, and sending pre-approval communications. Paying him per closed file makes it worse, because compensation tied to mortgage transactions by an unlicensed person is exactly what licensing is designed to prevent. Using Dev's email account to send these messages also creates a record that misrepresents who the client was dealing with.
Failure to notify the brokerage. Both arrangements were kept from the principal broker, which undermines the brokerage's supervision obligations.
2. What should Dev do now, and what should he have done differently?
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Now: Dev should stop the referral-fee arrangement immediately and not pay Tanya. He should end Amir's client-facing activities at once, retrieve or secure any client information Amir holds, and disclose both matters to his principal broker in writing. He should review the client's file to identify what incorrect advice was given and correct it with the client directly, documenting the correction. He should cooperate fully with any complaint process.
What he should have done: raised both arrangements with his principal broker before implementing them; confirmed in writing whether any referral payment was permissible and how it must be disclosed; and kept all client contact, rate discussions, and pre-approval communications with licensed staff. If he needed administrative help, he should have limited the unlicensed helper to tasks that do not involve advising clients or dealing in mortgages, under the brokerage's supervision.
The core lesson is that licensing obligations attach to activities, not job titles, and that the principal broker must be able to see and supervise what agents are doing.