Proposed changes to the rules governing Ontario’s mortgage brokers would free them from redundant due diligence when dealing with sophisticated clients and introduce an accelerated timeline for reporting compromising professional circumstances. The provincial government is currently collecting feedback on these and other regulatory tweaks arising from the mandated five-year review of the provincial Mortgage Brokers, Lenders and Administrators Act (MBLAA).
A consultation paper and draft regulations posted on Ontario’s regulatory registry also include measures to: authorize digital conveyance of orders and notices; allow and establish parameters for team operations within a brokerage; and allow junior mortgage agents to work with a broader range of lenders, given that the lenders are certified and the agents are under brokers’ supervision. Other recommendations from the MBLAA review, released earlier this year, have been left to the direction of the Financial Services Regulatory Authority (FSRA) on Ontario.
A proposed regulatory amendment would waive the requirement for brokers to perform suitability assessments prior to providing services to designated “permitted clients” deemed to be sophisticated investors, knowledgeable about a range of mortgage products. This list of entities and individuals, which aligns with the Ontario Securities Commission’s definitions and permissions, is already considered to hold adequate expertise to undertake non-qualifying syndicated mortgages (NQSF) without advance scrutiny.
Under proposed new rules, brokers would have flexibility to forego that step for all types of mortgage transactions permitted clients undertake. That would take form as a default waiver for entities such as financial institutions, pension and investment funds, and companies with more than $25 million in net assets, but individuals would need to provide written permission to be viewed as a permitted client. Under current rules, the latter are individuals with net financial assets in excess of $5 million.
“Permitted clients engage frequently in other complex transactions in the mortgage sector, such as commercial lending or large-scale investments,” the MLBAA review observes. “Given permitted clients’ substantial knowledge, resources and experience managing risks associated with these investment transactions, stakeholders have indicated that the requirement to conduct suitability assessments on permitted clients creates unnecessary administrative burden.”
The other proposed new rule would ensure the FSRA gets prompt notice when MLBAA licensees are accused of, or found culpable for, designated breaches. A requirement to notify the FSRA within five business days would replace the current practice of revealing such circumstances at the time of annual licence renewal.
“FSRA typically becomes aware of significant changes in a licensee’s circumstances outside the annual renewal process, through third-party information such as consumer complaints, terminations submitted by brokerages or through public information like news reports of charges or lawsuits,” the MLBAA review states.
As proposed, criminal offences, civil or administrative proceedings alleging fraud, breach of trust, deceit or misrepresentation, insolvency or bankruptcy proceedings, or regulatory actions undertaken in a jurisdiction outside of Ontario would trigger the requirement to report a “change of circumstances” to the FSRA within five business days.
Comments can be submitted to the public consultation until Aug. 20, 2026.
