Information on Agency

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Understanding Agency

The Mortgage Services Act (“MSA”), the Mortgage Services Regulation (“Regulation”) and the Mortgage Services Rules (“Rules”) outline requirements regarding agency, including designated agency and the prohibition on dual agency. Agency is a relationship between two parties in which one person, the agent (a licensee), has the authority to represent and act for another person, the principal (a borrower or lender client). Among other requirements, the agent must always act in the best interests of the principal. Agency is the foundation of the high standards of professionalism expected of mortgage brokers in their dealings with clients and the public.

Agency relationships are commonly created by express agreement, where the agent and the principal explicitly agree to the agency relationship orally or in writing. Ideally, an agency relationship is created by a written contract or disclosure where the authority of the agent is clearly laid out. In some instances, agency can also be created through the conduct of the licensee, even if there is no intention on the part of the parties to enter an agency relationship. That is known as implied agency. If implied agency is created, the agent must follow all the rules and obligations owed to clients in the MSA and Rules.

Under the MSA, a “client” is the person who has engaged the licensee to provide dealing, trading, or administering mortgage services. The definition of client means that an agency relationship is created between a licensee and the person who engages them, and it includes both services provided “to” the client, and services provided “on behalf of” the client. These two elements clarify that an agency relationship under the MSA does not just involve an intermediary role but also includes an advisory role. This means if a licensee is engaged by someone to provide them with dealing, trading, and/or administering services, they will be that person’s agent.

An agency relationship usually ends when the contract expires, or the transaction is complete, and all obligations have been met. It can also end earlier by mutual agreement. However, the duty to keep the client’s information confidential continues even after the agency relationship ends. The duty of confidentiality is the only duty that extends forever.

The requirement that the licensee be “engaged” by their client is important in distinguishing between clients and unrepresented parties: a client engages the licensee and receives services or has them provided on their behalf, whereas an unrepresented party is not a client of a licensee and may not receive services from a licensee.

Mortgage brokers must confirm in writing whether they are representing a borrower or lender using the Client Representation Form. As well, mortgage brokers who are administrating mortgages must have a written administrative agreement with their lender clients. Lenders do not have clients and cannot act as an agent for a borrower. Forms will be available on BCFSA’s Mortgage Services webpage in Spring 2026.

Licensees representing clients owe special legal duties to them, including:

• Loyalty: Always acting in the client’s best interests.
• Full disclosure: Sharing all information that might affect the client’s decisions.
• Avoiding conflicts of interest: Avoiding situations where personal interests conflict with the client’s interests. If unavoidable, such conflicts of interest must be disclosed to the client.
• Confidentiality: Keeping the client’s private information confidential, even after the client relationship ends.

For more information on duties, see BCFSA’s Mortgage Services Knowledge Base.

Mortgage lenders do not have clients, but they do have other obligations to borrowers under MSA-related legislation and other legislation. In contrast, a licensee dealing or trading in mortgages will always have a client in the transaction, and they must represent and protect that person. Except in limited cases, the licensee cannot act as a dual agent for a borrower and lender (when dealing in mortgages), or two separate lenders (when trading in mortgages) in the same transaction.

Designated Agency

Under the MSA, mortgage brokerages can use a designated agency model where agency is created when the brokerage and the client agree that the brokerage will designate one or more of the brokerage’s mortgage brokers to provide mortgage services as the designated agent(s) for the client. If designated agency is used, a brokerage can have mortgage brokers working for clients on opposite sides of a mortgage transaction. To ensure appropriate safeguards, each designated broker must act in accordance with the duties owed to each client under section 38 of the Mortgage Services Rules. This includes:

• acting in the best interest of their client;
• acting in accordance with the lawful instructions of their client;
• acting only within the scope of the authority given by their client;
• advising their client to seek independent professional advice on matters outside of the expertise of the licensee;
• maintaining the confidentiality of information respecting their client;
• conducting due diligence and disclosing to their client all known material information respecting the mortgage and transaction to which those mortgage services relate; and
• avoiding any conflict of interest or, where it is not possible to avoid them, promptly and fully disclosing any conflict to their client in BCFSA’s prescribed Conflict of Interest Disclosure form.

More information on licensee duties can be found on BCFSA’s Mortgage Services Knowledge Base.  

Designated agency effectively separates each client and their respective broker such that two brokers within the same brokerage can represent a borrower and a lender in the same transaction without creating a conflict of interest. The mortgage brokerage must continue to supervise all designated brokers to ensure that they fulfill their duties.

Mortgage Broker Teams’ Restrictions

(In effect April 1, 2027)

Mortgage brokers and other brokerage staff who operate as part of a team work closely with their team members and share confidential information. Therefore, team member licensees cannot operate as designated agents apart from each other and must collectively represent the same client.

The related mortgage brokerage of the members of a mortgage services team must designate all members of the mortgage services team to provide, as designated agents, mortgage services to or on behalf of the team’s client(s).

More information on mortgage services teams can be found on BCFSA’s Mortgage Services Knowledge Base.  

Prohibition on Dual Agency

Other than in a designated agency context, brokerages (and mortgage brokers) are not allowed to represent both the borrower and the lender in the same mortgage transaction except in very limited circumstances (see the Exceptions to Prohibition on Dual Agency section below for further information). Where a mortgage broker represents multiple parties in the same transaction on behalf of a brokerage, it is called dual agency.

The following situations are examples of dual agency:

• Borrower and lender as clients: The mortgage broker represents both the person borrowing the money and the person or entity lending the money.
• Buying lender and selling lender as clients: The mortgage broker represents both the lender selling or exchanging the mortgage and the lender buying or exchanging the mortgage.

In these cases, the mortgage broker would be working for parties with conflicting interests, which creates ethical and practical challenges. Because of the inherent conflict of interest, dual agency is prohibited except in very limited circumstances. Brokerages and mortgage brokers must handle any potential conflicts of interest carefully to ensure fair treatment for all clients. More information on resolving conflicts of interest between clients can be found on BCFSA’s Mortgage Services Knowledge Base. 

Exceptions to Prohibition on Dual Agency

There are two exceptions to the prohibition on dual agency:

1. Under-served, remote locations; and
2. Affiliates or related parties.

1. Dual Agency in Under-served Remote Locations

Mortgage brokers may engage in dual agency if the clients are in a remote location that is under-served by licensees, and it is impracticable for the clients to be provided mortgage services by different brokers.

Before engaging in dual agency, a mortgage broker must disclose to each client:

• The broker’s duties and responsibilities to the clients in a dual agency relationship; and
• The risks associated with dual agency.

A mortgage broker must use BCFSA’s prescribed form (to follow) to inform their clients of the risks associated with dual agency, and to record the reason why dual agency is necessary. The form must be signed by the Principal Broker and submitted to BCFSA. The brokerage must also enter into a written service agreement with each client to modify licensee duties.

2. Dual Agency for Affiliates or Related Parties

A mortgage broker may also engage in dual agency if the clients are affiliated within the meaning of the Business Corporations Act or are related parties¹. But first, a broker must disclose to each client:

• The broker’s duties and responsibilities to the clients in a dual agency relationship; and
• The risks associated with dual agency.

After making this disclosure, a broker must enter into a written agreement of dual agency with each client. The mortgage brokerage must also promptly provide the superintendent with the disclosure.

Definitions

Designated Agent: means one or more licensees designated by the licensee’s or licensees’ related mortgage brokerage as the exclusive licensee or licensees, of all of the licensees related to that mortgage brokerage, to provide mortgage services to a client of the mortgage brokerage in respect of a potential mortgage or mortgage transaction.

Dual Agency: means the representation, in respect of a mortgage or mortgage transaction, by a mortgage brokerage of any of the following:

1. both a borrower and a lender as clients;
2. both
3. the buying lender or prospective buying lender of a mortgage; and
4. the selling lender or prospective selling lender of a mortgage as clients;
5. two (2) or more borrowers or lenders, as the case may be, as clients who have conflicting interests in respect of the mortgage or mortgage transaction.

Affiliates (from Business Corporations Act): means a corporation that is affiliated with another corporation if

1. one of them is a subsidiary of the other;
2. both of them are subsidiaries of the same corporation; or
3. each of them is controlled by the same person.

Unrepresented Parties: in relation to a mortgage transaction, means a party to the mortgage transaction who is not a client of a licensee for the mortgage transaction.

Applicable Section of Mortgage Services Act, its Regulations, or the Mortgage Services Rules  

MSA Rules 

s. 40 [Designated agent]

s. 69 [Disclosure of risks to unrepresented parties]

s. 71 [Disclosure to client of remuneration]

s. 76 [Restriction on dual agency]

s. 77 [Dual agency in under-served remote location]

s. 78 [Dual agency for affiliates or related parties]

s. 79 [Addressing conflicts of interest when acting for multiple clients]

Footnotes

¹A “related party” is someone who:

• Has influence over another person, is influenced by another person, or both are influenced by the same third person. This influence can come from owning or controlling voting shares, convertible shares, or rights to acquire such shares, either directly or indirectly, alone or with others.
• Is considered to influence another person if they own or control more than 20% of the voting shares of that person, or would do so if they converted or exercised any related rights.
• Is considered a related party if both persons are related to the same third person.