Government Should Consult Industry on Fee Disclosure-Not Mandate it Using Weak Legislation
This petition had 1,632 supporters
If you are a mortgage broker in British Columbia, you have probably heard that the Registrar intends to mandate detailed fee disclosure for the mortgage broker industry soon. This means that brokers will have to provide borrowers with the exact amount of their remuneration received directly or indirectly from lenders under the conflict of interest provisions of the Mortgage Brokers Act (the Act). Here are some facts and opinions which we would like to make you aware of:
- The Registrar does not have the power to make policy, but she can make interpretations of the Act as part of her enforcement duties under the Act.
- The BC Supreme Court has identified major flaws in the conflict of interest sections of the Act, and has said that the Registrar cannot fill in gaps.
- For example, the Act does not require submortgage brokers to provide disclosure - only the mortgage broker.
- We believe that disclosure is provided in compliance with the Act when brokers explain to borrowers that the lender will compensate them and they provide a description of the kind of compensation that will be received.
- in 2008, the Registrar considered mandating disclosure of quantum, but did not impose it after the MBABC made submissions to FICOM on the subject.
- The Act has been in force for about 45 years, and the Registrar has not up until now interpreted the Act to require disclosure of quantum. There has been no explanation of why the Registrar's interpretation of the Act has changed.
- The MBABC has presented a compelling study to the Registrar which shows that detailed fee disclosure does not help and is harmful to consumers.
- Mortgage brokers assist consumers by sourcing competitive mortgage products. Mandating detailed fee disclosure has the potential to significantly weaken the industry and will reduce competitiveness and thereby hurt the consumer.
- We believe that government should have an open debate on the subject of mandatory compensation disclosure, its implications to the industry and the public, and include it as part of the ongoing consultation of the Mortgage Brokers Act by the Ministry of Finance.
Tell the government that:
1) it should abandon its intention to impose obligations on brokers to disclose the amount of their fee and other direct or indirect compensation from lenders to borrowers;
2) the subject of conflict of interest disclosure requires a full public consultation and should be done in the context of the legislative review of the Act.
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