Ontario regulator moves against brokers over unregistered “mortgage‑backed” investments
Ontario’s financial watchdog has moved to suspend the licences of two veteran brokers and shut down their Burlington brokerage over an alleged multi‑million‑dollar promissory note scheme.
The Financial Services Regulatory Authority of Ontario (FSRA) suspended the mortgage broker licence of Margaret (Marg) Green on the grounds that she was not suitable to be licensed, after she declined to request a hearing before the Financial Services Tribunal.
It also issued an interim suspension of the broker licence of principal broker Kathy Locke, who requested a Tribunal hearing, and revoked the brokerage licence of Concierge Mortgage Group Inc. on consent.
According to FSRA’s notice of proposal and interim order, Locke and Green were alleged to have issued promissory notes to at least 33 investors who collectively advanced about $4.9 million, with funds sometimes deposited into their personal accounts or a related company.
The regulator alleged that documents represented the investments as being secured by specific mortgages that have not been registered on title and that some investor money was used to make payments to other investors. These figures and allegations remain unproven and subject to change pending the Tribunal process.
FSRA said the pair “have issued documents falsely stating that borrowed funds will be secured by mortgages on real property” and held themselves out as administering mortgages without the required licence, contrary to the Mortgage Brokerages, Lenders and Administrators Act.
The regulator concluded that “their past conduct affords reasonable grounds for belief that they will not deal or trade in mortgages in accordance with the law and with integrity and honesty.”
In its interim order, FSRA warned that “the continued licensing of Locke and Green causes risk to consumers who may put their trust and confidence in them as licensees and public confidence in the regulated mortgage brokering sector.”
It said an immediate suspension was necessary to protect the public and maintain trust in the sector.
FSRA recently imposed $600,000 in administrative penalties on former broker Claire Drage after finding she orchestrated a “prolonged and extensive pattern of misconduct” that left investors facing major losses.
Additionally, former mortgage agent Rebecca Thien Kim Nguyend helped unlicensed operators arrange mortgages and did not assess whether the loans were suitable for vulnerable clients. She was fined $20,500 in administrative penalties.
Brokers face higher expectations on suitability and oversight
FSRA’s licensing reforms for private mortgage work – including the Level 2 agent requirement and a dedicated private mortgage course – aim to ensure brokers raising capital from private investors understood their duties around disclosure, suitability and fraud prevention.
Leading brokers have broadly backed that direction. Speaking to Canadian Mortgage Professional earlier this year, TCG Lending Centres principal broker Carmen Costa said Ontario’s framework is “appropriate, and in many ways necessary” even if operationally demanding, because “strong oversight is important” when dealing with complex products that can reshape clients’ finances.
The 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.”
“I’ve seen more cases against bad actors in the last 12 to 18 months than in previous years,” Joe Sammut, broker of record at Mortgage Architects – A Better Way, told Canadian Mortgage Professional.
“They [FSRA] 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.”
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