The proverbial floor is shifting beneath the ft of lenders, mortgage brokers and directors in British Columbia with the introduction of the brand new Mortgage Companies Act (the “MSA”) by the B.C. legislature on October 4, 2022.
Anticipated to come back into pressure in late 2023, the MSA replaces the present (and arguably outdated) Mortgage Brokers Act (the “MBA”) by establishing a brand new regime that regulates many facets of the mortgage business in British Columbia. Enactment of the MSA is a response to long-standing considerations that the MBA has not stored tempo with evolving nationwide and worldwide requirements in shopper safety and modifications within the monetary providers market.
Whereas the MBA presently regulates many non-institutional mortgage lenders, the MSA will create a brand new licensing class of “mortgage lender” which is separate and distinct from mortgage brokers. All individuals who have interaction in mortgage lending have to be licensed below the MSA, until they’re in any other case exempted by relevant laws or the foundations. These laws and guidelines are anticipated to be launched in late 2023, however these engaged in mortgage lending in British Columbia ought to pay attention to the pending modifications that may happen and take the time to study their tasks below the MSA.
The MSA will give the BC Monetary Companies Authority (the “BCFSA”) the power to develop guidelines for licensing and licensee conduct, which was one of many suggestions from the Cullen Fee of Inquiry into Cash Laundering in British Columbia. It can require licensing with restricted exemptions and offers the BCFSA with new powers to set requirements of conduct and improve disclosure and reporting obligations. The MSA will even set up completely different licensing ranges and outline “mortgage providers” to tell apart between the regulation of mortgage lenders, mortgage brokerage companies and particular person mortgage brokers.
Adopting the licensing and penalties framework of the Actual Property Companies Act, the MSA will even present the BCFSA with administrative, enforcement and rule-making powers over the business, as non-traditional lenders emerge, and extra British Columbians flip to mortgage brokers and on-line know-how to rearrange for his or her residential mortgages.
The MSA additionally offers the BCFSA elevated powers to research, self-discipline, license and set requirements of conduct and allow the BCFSA to raised handle rising monetary services and products sooner or later. Most notably, the MSA considerably will increase fines for contravening the MSA, beginning with a brand new administrative penalty of as a lot as $100,000. Disciplinary penalties might be elevated from a most of $50,000 to $500,000. People or companies with a couple of conviction may face a penalty of as a lot as $2.5 million, elevated from a most of $200,000.
The MSA won’t regulate all mortgage enterprise actions. Entities and people already topic to federal or provincial regulation, resembling banks and credit score unions and their workers, will proceed to be exempt.
If you’re a non-public lender, mortgage dealer or mortgage administrator with any questions associated to this subject, or require help navigating these modifications, please contact the writers or a member of Lawson Lundell LLP’s Actual Property Group or Banking & Debt Financing Group.