Across Canada, regulators are ramping up their commitment to greater consumer protection. Last January I wrote about FICOM, the mortgage broker regulator, among others, in BC, and their intentions to update the legislation with respect to compensation disclosure.
Yesterday, FICOM announced they would be going ahead with their plans to have mortgage brokers disclose the dollar amount of their compensation, even in cases where the mortgage broker is paid by the lending institution. Needless to say, the mortgage broker community had a lot to say about this change, and the subsequent uneven playing field among other mortgage origination channels (i.e. bank representatives, both in branch and mobile). Part of the problem is jurisdictional. FICOM does not regulate banks. That is the responsibility of the Federal Office of the Superintendent of Financial Institutions (OSFI). In an ideal world, all mortgage originators, across all channels, would be regulated by one regulatory body.
But perhaps that ideal, is not so elusive. Also making news yesterday, was the signing of a memorandum of understanding (MOU) between the Investment Industry Regulatory Organization of Canada (IIROC) and the Financial Services Commission of Ontario (FSCO) to share information about their respective licensees. IIROC regulates the securities industry, and FSCO regulates mortgage brokers, pension plans, insurance agents, loan and trust companies, among others.
Many “financial advisors”, including mortgage brokers, hold multiple licenses. The MOU follows a similar agreement between the IIROC and the Chambre de la sécurité financière that was signed back in November 2015. IIROC also has information-sharing arrangements with more than a dozen other Canadian and international regulators.
In fact, Ontario’s regulatory framework, in the financial services industry, was the subject of a government review last year which produced a number of proposals, including merging FSCO and the Deposit Insurance Corporation of Ontario (DICO) into a single regulatory agency. The new, larger regulatory body would be called the Financial Services Regulatory Authority (FSRA).
“The lines that once clearly delineated the various financial services industries are being blurred as the sector evolves and more individuals become active in multiple areas,” said Brian Mills, interim CEO and superintendent of FSCO. “Greater cooperation and coordination between regulators is becoming an increasingly important part of our work to protect consumers.”
Canada’s financial services industry has undergone rapid change in structure, technology, and indeed, consumer expectations. With that comes the necessary change in government oversight to protect the industry’s integrity. That’s good for everyone.
Stay tuned, there will be more to come.