The regulator has set out its stall in the mortgage space with a new year around the corner
The Financial Services Regulatory Authority’s (FSRA) recently unveiled mortgage brokering sector supervision plan for 2025-26 confirmed what most mortgage professionals already knew: private mortgages will remain one of the regulator’s top areas of focus in the sector for the foreseeable future.
Announcing that plan, FSRA highlighted the private space as a segment where consumers are at higher borrowing risk and underlined that the onus is on principal brokers to make sure their agents and brokers are compliant and acting with customers’ best interests in mind.
Those mortgage types can be a useful product for consumers who need help to get back to a more traditional loan, FSRA’s director, mortgage broker conduct Gina Stephens (pictured top) told Canadian Mortgage Professional – but they can also bring significant drawbacks.
“The challenge with private mortgages is that they are a lot more expensive than a traditional mortgage and they also have features that consumers who are used to a traditional mortgage may not fully understand,” she said.
“When you have an agent or broker intermediating that kind of product, it really does require enhanced due diligence. So we focus in particular on brokerages that transact in private mortgages with more vulnerable consumers because obviously folks are usually more vulnerable financially when they’re taking out a private mortgage.”
Mortgage suitability remains a familiar focus area
For brokers, it will be as important as ever in the coming year to document why they think a particular product is suitable: not just whether an individual consumer is able to get that specific mortgage, but why it’s appropriate for them.
That means confirming clients understand it’s more costly, that they need to have an exit strategy to transition to more affordable and sustainable financing, and have been given enough information to make an informed decision.
Private mortgages aren’t necessarily bad products, Stephens emphasized – “but they’re niche products and they’re products that a consumer really needs to understand before they sign on the dotted line.”
FSRA has a specific examination program looking at how larger brokerages are supervising their agents and brokers, and will expand its focus to include medium-to-large brokerages that have grown very quickly.
That’s because of a concern that they might not have robust controls in place, Stephens said, to ensure that all their agents and brokers – particularly those transacting in higher-risk products like private mortgages – are operating with integrity and the client’s interests in mind.
“In FSRA’s view, you can’t demonstrate that you’re supervising your brokers and agents properly unless there’s documentation on file that demonstrates a true line between the client information and the product,” she said.
The primary challenge the regulator sees in the sector: a gap in understanding what documenting suitability actually constitutes, according to Stephens.
Many brokers and agents don’t understand that they need to have more documentation on file for more complex products and financially vulnerable consumers, she said.
“Things change for consumers very quickly, especially in this current economic environment,” she said, “and so having those notes [is important] – that these are the conversations you had with this consumer, this is what led you to believe that they fit in Bucket A product versus Bucket B product, and that this is a shared understanding between the consumer and the agent.”
That’s crucial, “not just from an E&O standpoint,” she added, “but also to ensure that the brokerage can reasonably understand that their agents and brokers are indeed placing consumer sin appropriate products.”
. A new Fraser Institute analysis found that mortgage payments on a typical home now consume more than 50% of median after-tax family income across all 14 of Ontario's largest urban centres, with Toronto reaching an unsustainable 110.2%.https://t.co/xws1CauPHr
— Canadian Mortgage Professional Magazine (@CMPmagazine) November 23, 2025
FSRA’s mission ‘not antithetical’ to the industry's
High-profile brokers have blasted the conduct of bad actors in the mortgage industry this year and there appears to be broad support for regulation aimed at holding the profession accountable and elevating standards. Stephens said FSRA’s interests are those of the industry.
“We want them to be able to help their clients in the best way and there really is no impediment to ensuring that you have these kinds of compliance structures in place,” she said.
“All it does is ensure that the consumers have a greater trust in the industry because they know that brokerages are doing their due diligence and ensuring that brokers and agents are providing the best advice in any given circumstance. The message is not antithetical to a brokerage doing extremely well financially, to growing their business. It’s actually complementary.”
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