FSCO Has Suspended 79 Brokers – News Week Ending Feb27/09

The Financial Services Commission of Ontario otherwise known as FSCO has stepped up again doing an audit of all brokers in Ontario. During this audit they derived that 79 Brokers and Brokerages were functioning without the mandatory errors and omissions insurance. This insurance is required to cover acts of negligent behavior, or errors made accidentally. This insurance not only protects the broker but also protects the clients so that the error that was made can be rectified no matter what the cost.

Insurance is mandatory as of the effect of new legislation that took place in June of last year with audits starting early of this year. I myself, am enthused by FSCO’s move. Kudo’s to them for helping clear out the brokerages that don’t play by the rules. Although the cost of insurance is high, there is no reason that any brokerage should function without it. That is part of the cost of doing business.

On top of the proposal to revoke the licenses of all brokerages listed in the 79 suspensions, everyone that is listed has been imposed a monetary fine of $1000.

Although most of today’s brokers are compliant with FSCO’s regulations, be prepared to see numerous changes in the mortgage industry in the near future and more brokers losing their licenses. Some of the new changes that you should see:

- Changes to advertisements (cannot say your the best without proof)
- Changes to the way rates are presented (no more teaser rates in papers)
(cannot state “best rate”)
- Must show brokerages license and personal license number on everything
- Cannot provide any misleading or deceptive information or representation
This includes but is not limited to

i) Intentional misrepresentation
ii) Improper use of disclaimers
iii) Improper reliance on industry terms
iv) Incomplete comparative ads
v) Implied endorsements
vi) Improper use of teasers
vii) Use of unsubstantiated exaggeration
viii) Lack of timely reviews of advertisements

- Broker must show cost to break Toronto mortgage and any other fee’s involved or that may be incurred

If you find a broker not complying with any of the above noted changes contact FSCO and let them know. Please help us seed out all the brokers giving us a bad name in this industry.