Information on Referrals

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Understanding Mortgage Referrals

Licensees providing mortgage services have obligations under the Mortgage Services Act (“MSA”), Mortgage Services Regulation (“Regulation”), and Mortgage Services Rules (“Rules”) with respect to mortgage referrals. Referrals involve licensees getting paid (or getting any other kind of benefit, now or in the future) for referring clients to notary publics, lawyers, savings institutions, real estate licensees, or anyone else providing a product or service. Licensees can also pay others for referring clients to them. Referrals must have the client’s explicit consent and must not involve arranging a mortgage. Any payment or other benefit a mortgage broker receives in relation to a referral must always go through their brokerage and be disclosed to their client.

Referral Fees vs Other Fees

Referral Fees

Mortgage referrals are different from co-brokering, as referrals only pass on potential client information without participating in arranging the mortgage. There are two types of referral fees (remuneration):

1. Received referral fees: fees licensees get for recommending clients to notaries, lawyers, banks, real estate licensees, or others providing mortgage services.
2. Paid referral fees: fees licensees give (pay) to others for referring clients to them.

Co-Brokering Fees

Co-brokering involves two licensees from different brokerages sharing the responsibility and fees for arranging a mortgage. Both licensees are equally responsible for following requirements under the MSA, Regulation, and Rules. More information on co-brokering can be found on BCFSA’s Mortgage Services Knowledge Base.  

Prohibited Fees

The Business Practices and Consumer Protection Act (“BPCPA”) prohibits mortgage brokers from charging any fees for arranging a mortgage in British Columbia, unless those fees are deducted from the mortgage advance at time of funding.

Examples of prohibited fees include:

• “Application fees” charged before funding; 
• “Commitment fees” charged at application or issuing a mortgage commitment; 
• “Cancellation fees” charged if the borrower decides not to proceed; and 
• Any non-third-party fees charged before funding or if the borrower decides not to proceed. 

Record Keeping Requirements for Referral Payments

Brokerages must record all referral payment transactions using the appropriate referral fee form, as provided by BCFSA.

Receiving Referral Fees

When a licensee receives remuneration for referring a client, the brokerage must complete the appropriate referral fee form, as provided by BCFSA, including details like:

• amount received; 
• date received; 
• description of the referral activity; 
• name of person who paid the referral fee; and 
• recipient name(s) and payment dates. 

Paying Referral Fees

When a licensee pays for a referral that they get from someone, the brokerage must then complete the appropriate referral fee form, as provided by BCFSA, including details like:

• amount paid; 
• date paid; 
• description of the referral activity;  
• name of licensee who paid the referral fee; and 
• recipient name(s) and payment dates.  

Definitions

Remuneration: includes any form of remuneration, including any commission, fee, gain or reward, whether the remuneration is received, or is to be received, directly or indirectly.

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

MSA

s. 32 [Records]

MSA Rules

s. 103 [Records related to referral fees received by a licensee]

s. 104 [Records related to referral fees paid]

MSA Regulations

s. 10 [Exemption for individuals making referrals]

Other Legislation

Sections 4(3)(b)(ix) and 5 of the Business Practices and Consumer Protection Act