FSCO, Ontario’s mortgage broker regulator, has inactivated the licenses of 79 mortgage brokers “for not having errors and omissions insurance coverage.”
Recent legislation requires that all licensed mortgage brokerages carry errors and omissions insurance with extended coverage for fraudulent acts.
FSCO discovered that these brokers did not have E&O insurance after auditing insurance company records in October.
The brokers named were apparently unaware of the rule (despite repeated notices by FSCO), or didn’t plan on continuing in the business, or simply procrastinated a bit too long.
FSCO says, “Along with the Interim Orders, these mortgage brokerages were served with Notices of Proposal to revoke their licences and impose an administrative monetary penalty of $1000 for not meeting this requirement.”
This enforcement affects a tiny fraction of mortgage brokers in Ontario. The vast majority of brokers are fully compliant with the new E&O insurance rules, especially brokers from National brokerage firms–who generally have more robust compliance departments. The alleged offenders seem to be mostly small independent brokers.
Sidebar: In March 2009, FSCO will be selecting “a sample of mortgage brokerages to visit, in order to determine whether they are in compliance with the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA).” More…