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Understanding disclosure requirements under the Mortgage Services Act
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Under the Mortgage Services Act (MSA), mortgage brokers (this includes principal brokers) have several key disclosure obligations. Many of these requirements previously existed under the Mortgage Brokers Act. However, the MSA strengthens disclosure requirements and introduces new standardized forms as part of measures to enhance consumer confidence.
Mortgage brokers are required to give borrowers and lenders clear information at specific points in the process so they can make informed decisions. This includes ensuring they understand the role and responsibilities of the broker, how the broker is paid, the suitability of the mortgage, and the risks involved.
Some disclosures must be made using prescribed forms, where BCFSA requires the use of standard forms established by the Mortgage Services Rules (the Rules) under the MSA. If a form is prescribed, you must use it. You cannot change or customize it, even if you are integrating it into software. The form must be the same version published by BCFSA.
If there is no prescribed form, you still need to provide the required disclosure. In these cases, you can either use an optional BCFSA form or provide the information in another format that works for your business. See the Summary of Disclosure Forms for Borrowers and Lenders below, for more information.
Over the coming weeks, BCFSA will provide more information on disclosure requirements, including regulatory statements and guidance, to supplement the information below.
All MSA disclosure forms are available and can be downloaded at Mortgage Services Forms.
Software application providers who use BCFSA’s MSA disclosure forms must comply with the BCFSA Forms and Clauses Terms of Use for Software Application Providers.
Understanding individual disclosure forms and form packages
Brokers can provide disclosure to borrowers and/or lenders by either:
- Using individual forms, or
- Using form packages.
Most brokers will use form packages to provide the required disclosure at the same time. The information below explains how to provide disclosures using form packages.
Step-by-step disclosure process to borrowers using disclosure form packages
As a broker, you can meet your disclosure requirements to borrowers by providing a representation disclosure form along with a single disclosure form package for borrowers.
Form packages are designed to simplify the process, but there are specific steps you must follow.
Step 1: Disclose your role first (always required)
Before you provide any mortgage services, you must clearly tell the borrower whether you are representing them or not. You must do this before using a disclosure form package.
If you represent the borrower (i.e., the borrower is your client) → provide the Disclosure of Representation to Borrower (Form 1A)
- Explains that the borrower is your client and outlines the services and responsibilities they can expect from you.
- Why it matters: It prevents confusion about your role and duties right from the start and offers an opportunity for you to professionally introduce yourself.
If you do not represent the borrower (i.e., the borrower is not your client because you represent a lender) → provide the Disclosure of Risks to Unrepresented Borrower (Form 2A). Note that this disclosure is not required if the borrower falls within the definition of a “permitted person” under the Rules.
- Explains that the borrower is not your client and outlines the risks of proceeding without broker representation.
- Why it matters: It ensures the borrower understands that you are not acting on their behalf and the related risks of being unrepresented.
Step 2: Prepare the correct disclosure form package
After providing the appropriate representation disclosure, the broker will get information about the borrower’s needs and circumstances and consider suitable mortgage options.
The broker then sends applications to lender(s) they have relationships with and waits for a response. Disclosure to lender(s) may also be required depending on whether any disclosure exemptions under the Rules apply. If disclosure is provided, the forms packages may be used to make that disclosure (see Step-by-step disclosure process to lenders using disclosure form packages, below).
Once a lender responds with an offer, the broker will complete one the appropriate disclosure form packages and review it with the borrower:
- Disclosure to Represented Borrowers (Forms Package #1) → for borrowers you represent as a client (i.e., the borrower is your client)
- Disclosure to Unrepresented Borrowers (Forms Package #3) → for borrowers you do not represent as a client (i.e., the borrower is not your client because you represent a lender)
Why it matters:
- The form packages include mandatory disclosure on material risks, remuneration, and conflicts of interest. This disclosure ensures the borrower understands important information before they decide on a mortgage option, including:
- Important information about the mortgage transaction.
- The material risks of the mortgage transaction.
- How the broker is compensated for their services.
- Any circumstances where the broker and/or brokerage (if applicable), or their associates and/or related parties’ interests, may have an interest in the mortgage transaction.
Step 3: Meet disclosure deadlines
A broker will satisfy all disclosure deadlines under the Rules if they provide disclosure form packages when they:
- Send the borrower’s application to lenders (if applicable) and/or
- Present suitable mortgage options to the borrower.
If the disclosure cannot be provided at the same time in one of the packages, the broker can use the individual disclosure forms. However, they must meet the deadlines associated with each disclosure.
Note that for consumer mortgages, brokers must also provide Business Practices and Consumer Protection Act financial disclosure (often referred to as total cost of credit and annual percentage rate disclosure). This disclosure is also typically made when presenting mortgages, but it must be made at least two business days before the borrower signs the mortgage agreement or makes a payment in connection with the mortgage. BCFSA does not prescribe a form for this disclosure because it is required under the Business Practices and Consumer Protection Act.
Why it matters: Borrowers are entitled to full disclosure, and deadlines set in the Rules must be met. Disclosure deadlines are intended to give borrowers enough time to review the details, ask questions, and make informed decisions before entering into a mortgage agreement.
Step-by-step disclosure process to lenders using disclosure form packages
As a broker, you can meet your disclosure requirements to lenders by providing a representation disclosure along with a single disclosure form package to lenders. If applicable, an additional disclosure form for construction and development mortgages may also be required.
Form packages are designed to simplify the process, but there are specific steps you must follow.
Step 1: Disclose your role first (always required)
Before you provide any mortgage services, you must clearly tell the lender whether you are representing them or not. You must do this before using a disclosure form package.
If you represent the lender (i.e., the lender is your client) → provide the Disclosure of Representation to Lender Form (Form 1B for lending mortgages or Form 1C for trading mortgages)
- Explains that the lender is your client and outlines the services and responsibilities they can expect from you.
- Why it matters: It prevents confusion about your role and duties right from the start and offers an opportunity for you to professionally introduce yourself.
If you do not represent the lender (i.e., the lender is not your client because you represent the borrower in a dealing transaction or another lender in a trading transaction) → provide the Disclosure of Risks to Unrepresented Lender (Form 2B for lending mortgages or Form 2C for trading mortgages). Note that this disclosure is not required if the lender falls within the definition of a “permitted person” under the Rules.
- Explains that the lender is not your client and outlines the risks of proceeding without broker representation.
- Why it matters: It ensures the lender understands that you are not acting on their behalf and the related risks of being unrepresented.
Step 2: Prepare the correct disclosure form package
After providing the appropriate representation disclosure, select the disclosure form package that matches your relationship with the lender:
- Disclosure To Represented Lenders (Forms Package #2) → for lenders you represent (i.e., the lender is your client)
- Disclosure To Unrepresented Lenders (Forms Package #4) → for lenders you do not represent (i.e., the lender is not your client).
Note: If an Addendum for Construction and Development Mortgages (Form 5A) is needed, it must also be added to the appropriate form package.
Why it matters:
- The form packages include mandatory disclosure to ensure the lender understands important information before they decide to lend money, including:
- Important information about the borrower, the property, and the mortgage terms.
- The material risks of the mortgage transaction.
- How the broker is compensated for their services.
- Any circumstances where the broker and/or brokerage (if applicable), or their associates and/or related parties’ interests, may have an interest in the mortgage transaction.
Step 3: Meet disclosure deadlines
To meet disclosure deadlines, provide the complete disclosure form package when presenting mortgage options to the lender (if applicable, along with the required Addendum for Construction and Development Mortgages (Form 5A).
If the disclosure cannot be provided at the same time in one of the packages, the broker can use the individual disclosure forms. However, they must meet the deadlines associated with each disclosure.
Why it matters:
- Lenders are entitled to full disclosure, and deadlines set in the Rules must be met. Disclosure deadlines are intended to give lender enough time to review the details, ask questions, and make informed decisions before entering into a mortgage transaction.
The mortgage transaction may not be completed if the proper disclosure is not provided at the right time. Section 8 of the MSA states that if a licensee fails to provide a lender with the information disclosure statement as required under section 73 of the Rules, the lender can refuse to advance funds.
Summary of disclosure forms for borrowers
| When to provide the disclosure form1 | Disclosure form name | Is a prescribed form required? | Is the form included in form packages #1 and #3? | Purpose of the form |
|---|---|---|---|---|
| Before providing services | Form 1A: Disclosure of Representation to Borrower | Yes (prescribed form) | No | Confirms who the broker represents so there is no confusion from the outset |
| Before providing services | Form 2A: Disclosure of risks to unrepresented borrower | Yes (prescribed form) | No | Explains to borrower they are not being represented and clearly explains relevant risks |
| When presenting options | Form 6A: Disclosure of suitability and material risks to borrower | Optional form can be used. If you do not use the optional form, you must still disclose the information | Yes | Explains risks so the borrower understands the transaction before proceeding |
| When presenting options | Form 4: Disclosure to borrower of expected remuneration | Yes (prescribed form) | Yes | Ensures transparency about how the broker is paid |
| Promptly | Form 7: Disclosure to client of remuneration | Yes (prescribed form) | Yes | Ensures transparency about how the broker is paid |
| Earliest opportunity; at least two business days before signing or enters into agreement | Form 3A: Disclosure of interests to borrower | Yes (prescribed form) | Yes | Clearly flags any interests in a standardized and clear format |
| At least two business days before signing or payment | Total cost of credit / annual percentage rate | Form not provided by BCFSA | No | Ensures the borrower understands full cost of mortgage and required under the Business Practices and Consumer Protection Act |
1 When to provide disclosure if using a forms package: Provide the Form 1A or 2A (as appropriate) before providing services to the borrower and then provide the disclosure form package when presenting mortgage options to the borrower. The Total Cost of Credit / Annual Percentage Rate disclosure must be provided in addition, at least two business days before signing or payment.
Summary of disclosure forms for lenders
| When to provide the disclosure form1 | Disclosure form name | Is a prescribed form required? | Is the form included in form packages #2 and #4? | Purpose of the form |
|---|---|---|---|---|
| Before providing services | Form 1B (for lending) or Form 1C (for trading): Disclosure of representation to lender | Yes (prescribed form) | No | Confirms who the broker represents so there is no confusion from the outset |
| Before providing services | Form 2B (for lending) or Form 2C (for trading): Disclosure of risks to unrepresented lender | Yes (prescribed form) | No | Explains to the lender they are not being represented and clearly outlines relevant risks |
| When presenting options | Form 6B: Disclosure of suitability and material risks to lender | Optional form can be used. If you do not use the optional form, you must still disclose the information | Yes | Explains risks so the lender understands the transaction before proceeding |
| Promptly | Form 7: Disclosure to client of remuneration | Optional form can be used. If you do not use the optional form, you must still disclose the information | Yes | Ensures transparency about how the broker is paid |
| At required points when offers are delivered | Form 3B: Disclosure of interests to lender | Yes (prescribed form) | Yes | Clearly flags any interests in a standardized and clear format |
| Before release/advance of funds | Form 5: Disclosure of information statement to lender And, if applicable, Form 5A: Addendum for construction and development mortgages | Yes (prescribed form) | Partially: Form 5 is included, but Form 5A is not | Provides key details the lender must understand before committing funds |
2 When to provide disclosure if using a forms package: Provide the Form 1B or 1C or 2B or 2C (as appropriate) before providing services to the lender and then provide the disclosure form package when presenting mortgage options to the lender along with Form 5A, if applicable.