And more agents could be headed for the exits as March 31 renewal deadline looms
Ontario’s mortgage broker regulator has ramped up enforcement actions against industry bad actors over the past year, announcing a flurry of penalties and charges against agents and brokers who have flouted compliance rules, misled consumers, or otherwise failed to uphold their professional obligations.
And that crackdown is welcome news for the industry, according to a mortgage brokering veteran who described the approach to the profession by some less-established brokers and agents as “extremely frustrating.”
Joe Sammut (pictured top), broker of record at Mortgage Architects – A Better Way, told Canadian Mortgage Professional that Financial Services Regulatory Authority of Ontario (FSRA) action against those who were harming the reputation of mortgage brokers would prove beneficial for the industry in the long run.
“I’ve seen more cases against bad actors in the last 12 to 18 months than in previous years,” he said. “They seem to be clamping down and cleaning up, and they’re making sure the fines they’re enacting on people are publicized.
“They’re finally taking seriously the role we play as mortgage professionals in the transaction. It’s frustrating to see the lack of professionalism [from some mortgage agents]. But I think what the latest regulation is doing is making the good ones even better and the bad ones are that much more obvious.”
Agent standards questioned as numbers surge
Standards within the agent community have long been flagged as lacking by established brokers, particularly with a flood of new entrants arriving in the space during the boom market of the COVID-19 pandemic.
In June 2019, according to FSRA, there were 2,833 brokers and 12,277 agents licensed across the province. By the same month six years later, the number of agents across the regulator’s two new licensing classes had risen to 9,923 in Level 1 and 5,235 in Level 2, with the number of brokers totalling 3,059.
That marks a jump of over 20% in the combined agent and broker total, with that growth sparking debate about whether it’s too easy to obtain a licence to broker mortgages in Ontario.
The litany of alleged misconduct recently identified by FSRA in the sector has been stark: undisclosed fees, submission of fake documents, unlicensed activity, false filings, investor harm, and more.
The surge in enforcement action has arrived as part of the regulator’s ongoing focus on suitability, and whether agents and brokers acted with their clients’ best interests in mind and put them in the right product when they arranged a mortgage.
The conduct of agents transacting in private mortgages is also squarely in FSRA’s sights. Last year, the regulator emphasized some of the risks associated with those mortgage types – particularly when it comes to fees and pricing.
Could the number of licensed Ontario agents be about to fall?
While the vast majority of Ontario agents haven’t been involved in wrongdoing, the industry could be in line for a drop in the number of licensed agents in the weeks ahead.
That’s because the deadline for agent and broker licence renewal is fast approaching, on March 31 – and with the mortgage and housing markets still mired in a slump, Sammut sees a substantial thinning-out of the space.
FSRA has already indicated that thousands of licences still haven’t been renewed and highlighted the consequences for individuals who continue to transact in mortgages after that date without renewing.
Sammut, though, believes there are plenty of currently licensed agents in Ontario who simply will not be coming back to the sector.
“There is going to be a large number of agents that do not renew their licence because one, they can’t afford it and two, they should never have been here in the first place and they’re going back to what they used to do,” he said.
“So there will be a large number of agents who don’t renew. There’s going to be a much-needed culling in the industry in two short weeks.”
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