Information on Record Keeping

Understanding Record Keeping Requirements

Licensees providing mortgage services have obligations under the Mortgage Services Act (MSA), Mortgage Services Regulation (Regulation), and Mortgage Services Rules (Rules) related to record keeping.

Mortgage brokerages must keep and securely store all relevant records related to their services. This includes protecting records against all risks of loss, destruction and unauthorized access, use, or disclosure. Mortgage brokers must promptly provide relevant records to their Principal Broker. Promptly generally means doing something without delay, considering the circumstances.

Storage, Access, and Control

• Records must be stored securely in British Columbia and be available at the brokerage’s head office.
• Records can be kept electronically if they can be easily accessed and printed.
• Licensees must notify BCFSA immediately if records are lost or no longer controlled by the brokerage.
• BCFSA can review, inspect, and audit all brokerage records and may require electronic records to be printed or vice versa.

Retention and Confidentiality

• Records must be kept for at least seven years unless BCFSA approves a shorter period, in writing.
• Mortgage-related records must be kept for at least seven years after the last transaction.
• Financial and other records must be kept for at least seven years after creation.

A brokerage must store its documents in a way that ensures that the confidentiality of client information is maintained.

Types of Records to Keep

Examples of the types of records a brokerage must keep include:

• signed copies of client service agreements;
• signed copies of mortgage administration agreements;
• commitment letters;
• communications between parties in a mortgage transaction (emails, texts, voice mails, etc.);
• signed mortgage applications;
• property appraisals;
• credit reports and authorizations;
• down payment confirmation (bank statements, gift letters);
• client income tax records (Notices of Assessment, tax returns, T4 slips);
• employment letters and pay stubs;
• rental tenancy agreements;
• business licenses and incorporation documents;
• signed copies of cost of credit disclosures;
• signed copies of required disclosures;
• client banking records;
• receipts of monies from client; and
• any other relevant documentation relating to the transaction.

The Rules specify how brokerages must prepare, maintain, and retain records, divided into three subsections:

1. Financial Records,
2. Other Records (non-financial records), and
3. General Record-Keeping.

The information below explains these requirements.

Requirements for Financial Records

Financial Records for Mortgage Services

Brokerages must promptly prepare and keep detailed financial records of all mortgage transactions. The records must clearly show:

• money the brokerage holds or receives for itself;
• money the brokerage pays out for itself;
• money held or received for others, including who is involved and why the money is being held;
• money paid out for others, including who is involved and why the money is being paid;
• total money held or received for others; and
• total money paid out for others.

General Account and Trust Account Records

For each account, a brokerage must:

• keep all banking records, including statements, cancelled cheques, and documents showing deposits and withdrawals;
• prepare and keep a record of account activity, including showing amounts received and paid, reasons for each, and any unexpected balances; and
• prepare and keep monthly reconciliations of banking statements, including the above information, within five weeks after the end of each month.

More information on trust accounts can be found on BCFSA’s Mortgage Services Knowledge Base.

Pooled Trust Account Records

A pooled trust account holds money for more than one person. As well as keeping the trust account and general account records referred to above, brokerages with a pooled trust account must also prepare and keep the following records:

• separate trust ledgers for each mortgage transaction, showing all money received and paid in the mortgage transaction, and any unexpected balances; 
• separate trust ledgers for money meant for remuneration, showing all money received and paid for each licensee, and any unexpected balances; and 
• monthly trust liability and asset reconciliations, prepared within five weeks after the end of the month. These reconciliations reconcile any unexpected balances and list each mortgage transaction involving trust money, the amount of money in each transaction, who the money is held for, and the amounts being held for each person.  

Preparation of Financial Records After Mortgage Services Provided

After a licensee has finished providing mortgage services to or on behalf of a client, the licensee must continue preparing and updating all financial records required under the Rules that relate to those services. Even where a client relationship ends, a brokerage must continue to prepare all financial records related to the mortgage services provided to that client.

Requirements for Other Records

General Records

Brokerages must keep all written disclosures, service agreements, annual financial reports, and activity reports. Activity reports may be requested from time to time by BCFSA. Brokerages must also keep records related to policies and procedures established under the Rules, including records tracking each policy and procedure review.

Mortgage Records

Brokerages must keep records that show the repayment terms for each mortgage the brokerage is involved with, including the total amount paid (or to be paid) by the borrower, as well as the fees, expenses, costs, and other charges required to be paid by the borrower.

Mortgage Administration Records

Brokerages that are licensed to administer mortgages must keep records of all mortgages administered on behalf of lenders, including the original amount owed, all transactions, and the interest or percentage owned by each party. If a brokerage maintains a pooled trust account, it must also keep trust ledgers for each mortgage, recording every transaction including:

• money received from borrowers, including amounts, dates, and how the money was received;
• advances, including amounts, dates, and how the money was paid;
• repayments, including amounts, dates, and names of people;
• disbursements, including amounts, dates, and names of people;
• any other liabilities, income, and expenses relating to the mortgages;
• any other receipts or disbursements relating to the mortgages; and
• outstanding balances for each mortgage, including the total, and the sub-totals for each person who has an interest in the mortgage.

Brokerages must prepare and keep monthly records of payments that match the total principal owed by borrowers with the total balance owed to lenders. These reconciliations must be dated and signed each month by the principal broker and explain any differences between these amounts at the end of the month. The records must include a detailed account of any differences and reasons for them.

Referral Fee Records

When a brokerage or licensee is paid (remunerated) for a referral and that is the only mortgage service provided, the brokerage must record certain information using the appropriate form as provided by BCFSA. Information includes names, dates, amounts, and a description of the activity for which the payment is made. This applies to referrals to a notary, lawyer, bank, real estate licensee, or anyone else who provides related services or products. If a licensee pays someone else for referring a client to them, the brokerage must also record details using the appropriate form as provided by BCFSA. This includes dates, names, amounts paid, and a description of why the referral fee was paid. More information on remuneration will be forthcoming on BCFSA’s Mortgage Services Knowledge Base.

Co-Brokering Records

Co-brokering is when two mortgage brokers from different brokerages work together on the same side of the mortgage transaction. If a licensee co-brokers a mortgage, the brokerage must prepare and keep a record that contains the information required by the Superintendent, including ensuring that both parties appropriately maintain all records relevant to the transaction. Both licensees are responsible to comply with these disclosure requirements. More information on co-brokering will be forthcoming on BCFSA’s Mortgage Services Knowledge Base.

General Record-Keeping Requirements

Brokerages must follow a number of general record-keeping rules:

• Keep records up to date;
• Make sure electronic records can be easily printed (and vice versa), including during an audit, inspection or investigation;
• Keep records under the brokerage’s direct control;
• Protect records from loss, destruction, and unauthorized access, use or disclosure; and
• Retain records for at least seven years unless BCFSA authorizes a shorter period in writing.

Further Record-Keeping Requirements

Obligations When Winding Up Business

If a mortgage brokerage stops operating, it must:

• give the Superintendent information about its business, including financial records; and
• ensure all records that need to be kept for seven years are retained by: another mortgage brokerage; an accountant, lawyer or notary public; or another person approved by the Superintendent.

Records to be Provided to the Superintendent

Upon Request of the Superintendent

Upon request, a licensee must provide the Superintendent any records they have or control, including personal information.

After Specified Events

The Superintendent may require licensees to provide certain records, including personal information, within a certain time period after certain events. Should the Superintendent require these additional records, licensees will be notified.

Periodic Report on Mortgage Brokerage Activity

A mortgage brokerage must file a mortgage brokerage activity report, following the Superintendent’s requirements and schedule.

Periodic Report on Brokerage Governance Policy

A mortgage brokerage must regularly file a report on its mortgage brokerage governance policy, following the Superintendent’s requirements and schedule.

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

MSA

s. 32 [Records]

s. 33 [Trust Accounts]

MSA Rules

s. 83 [Superintendent review of accounts and other records]

s. 84 [Annual financial statements and accountant’s report]

s. 85 [Periodic report on mortgage brokerage activity]

s. 86 [Requirement to ensure solvency and cover negative balances]

Part 7 – Mortgage Brokerage Records

• Division 1 – Financial Records
• Division 2 – Other Records
• Division 3 – General Record Keeping
• Division 4 – Records or Information Provided to Superintendent