The Financial Services Commission of Ontario has issued consultation paper that aims to overhaul the regulation of mortgage brokers. The province is aiming to improve the Mortgage Brokers Act, which has not been significantly updated during the past 30 years.

The policy objectives of the review are to: improve consumer protection; streamline regulatory approaches and eliminate regulatory gaps; ensure that regulation is cost effective and provides value-added benefits, and harmonizes with other regulatory bodies and jurisdictions.

Currently, there are no proficiency standards for those dealing in mortgages on behalf of a registered broker unless the person is an officer or director of a corporate registrant. As well, there are no statutory sanctions or enforcement tools available to the regulator.

The government is considering requiring anyone who deals in mortgages to register and meet minimum proficiency standards; or to require everyone who deals in mortgages to be registered as a mortgage broker under the Act. It plans to scrap educational exemptions for lawyers and accountants.

The paper also contemplates doing away with foreign ownership restrictions in the mortgage brokerage business. It also considers requiring mandatory disclosure of registration information on all written materials and advertising provided to consumers by any person dealing in mortgages. And, it also notes that the province may require mandatory errors and omissions insurance.

FSCO will also be undertaking a study of the funding model with a goal to achieving full cost recovery from the mortgage broker sector on an equitable basis.

Comments are due by September 3 to Mike Colle, parliamentary assistant to Minister of Finance, Greg Sorbara.