Mortgage Agent Regulation and Ethics in Ontario
The Regulatory Architecture
Candidates must know that mortgage brokering in Ontario is administered under the Mortgage Brokerages, Lenders and Administrators Act (MBLAA) and its regulations, with the Financial Services Regulatory Authority of Ontario (FSRA) as regulator. Know the licence classes - brokerage, principal broker, broker, agent, mortgage administrator, and lender - and the rule that agents and brokers must be licensed through a brokerage and may not deal directly with the public on their own account. Understand the principal broker's supervisory duties, the requirement to maintain errors and omissions insurance and a prescribed complaint-handling process, and the obligation to disclose conflicts of interest in writing.
Duties to the Borrower
Central duties include acting with honesty and good faith, disclosing all material facts, presenting the best available options reasonably suited to the borrower, and disclosing compensation from lenders. Disclosure of fees must be made in writing before services are provided. Privacy obligations flow from provincial privacy law and the brokerage's own policies.
Traps in Exam Questions
Watch for scenarios where an agent takes instructions directly from a lender or realtor rather than the borrower, signs a borrower's name, or receives undisclosed incentives. Another trap is confusion between a broker and an agent - both may deal with the public, but only through a brokerage. Also watch for commission disclosure timing and for the rule that a licensee may not offer legal advice.
Rule of Thumb
If an incentive, payment, or relationship could reasonably influence your recommendation, disclose it in writing before the borrower commits.
Worked example: An agent is offered $500 by a lender for each referral. The agent must disclose this in writing to the borrower; failure to do so breaches conflict-of-interest and disclosure duties regardless of whether the loan is suitable.