​​Suitability Requirements for Submortgage Broker Applicants​

Background Information

Section 4(a) of the MBA (British Columbia) requires an applicant for a new registration or a registration renewal to satisfy the Registrar of Mortgage Brokers (“Registrar”) of the BC Financial Services Authority (“BCFSA”) that they are suitable for registration and that their registration is not otherwise objectionable. The applicant has the onus to demonstrate they meet the requirements of section 4. A registration or renewal will not be granted where an applicant fails to show they meet these requirements.

An applicant is suitable if they are qualified by education and experience, honest, candid, of good reputation, willing to comply with regulatory and industry standards, and have sufficient financial responsibility. An applicant’s registration is not objectionable if they are suitable, it will not bring the mortgage broker industry into disrepute, and it will not harm the public interest.

The applicant has the onus to demonstrate they meet the requirements of section 4. If the applicant cannot demonstrate that they are suitable and that their registration is not objectionable they will not be registered. If an applicant meets those criteria but the Registrar still has concerns, the Registrar has broad jurisdiction to impose conditions to protect the public, protect the reputation of and public confidence in the mortgage industry, and guard against repeat offending.

New Applicants

For new applicants, suitability and objectionability issues must be addressed before the Registrar will register the applicant. If an applicant does not satisfy the Registrar that they are suitable to be registered and that their registration is not objectionable, the Registrar may refuse to grant the registration under section 4(b) of the Mortgage Brokers Act. Before refusing to register the applicant, the Registrar will provide the applicant an opportunity to be heard. An opportunity to be heard is provided to determine whether an applicant is suitable and if their registration is not objectionable. If they are determined not to be suitable or if their registration is determined to be objectionable, the opportunity to be heard process may also address when the applicant may reapply.

If the Registrar is satisfied that the applicant for a new registration has met the requirements of section 4 of the Mortgage Brokers Act but considers that conditions on the applicant’s registration are necessary, the Registrar may impose conditions on the registration under section 4(c) of the Mortgage Brokers Act. Before imposing those conditions, the Registrar will advise the applicant of the proposed conditions and will provide the applicant an opportunity to respond regarding the proposed conditions.

Renewal Applicants

If an applicant for registration renewal does not satisfy the Registrar that they are suitable to be registered and that their registration is not objectionable, the Registrar may refuse to renew the registration under section 4(b) of the Mortgage Brokers Act or allow the registrant’s registration to proceed subject to any conditions the Registrar finds necessary to protect the public, increase confidence in the mortgage industry, and avoid damage to the reputation of the mortgage industry. For renewal applications, the registrant’s registration may proceed subject to conditions requiring updates on other legal proceedings, noting that the registration is subject to a suitability determination by the Registrar after conclusion of the investigation, or other restrictions the Registrar finds necessary.

Requirements

Suitability and Objectionability for Individual Registrants

Suitable and unobjectionable registrations are essential to the mortgage industry because they:

• Serve the public interest and protect consumers;
• Promote high ethical standards and a conscientious mindset;
• Protect the reputation of the mortgage broker industry; and
• Protect and enhance public confidence in the mortgage broker industry.

When applying for registration, an applicant must disclose all current charges and all convictions (except pardoned convictions or unrevoked criminal record suspensions), regardless of date, including absolute and conditional discharges (unless they are no longer disclosable under the Criminal Records Act).

An applicant must also disclose certain concluded and pending civil matters, including bankruptcies, as described below.

If there are any concerns regarding an applicant’s suitability or that their registration may be objectionable, the Registrar will consider that application in accordance with this process. For new applicants, suitability and objectionability issues must be addressed before the Registrar will register the applicant. This may require an investigation by BCFSA. For renewal applications, the registrant’s registration may proceed subject to conditions requiring updates on other legal proceedings, noting that the registration is subject to a suitability determination by the Registrar after conclusion of the investigation, or other restrictions the Registrar finds necessary.

(1) Suitability – Section 4(a) of the Mortgage Brokers Act

(a) General

Section 4(a) of the Mortgage Brokers Act states that the Registrar must grant a registration or renewal if, in the opinion of the Registrar, the applicant is suitable for registration and the applicant’s registration is not objectionable.

An applicant is suitable if they are qualified by education and experience, honest, candid, of good reputation, willing to comply with regulatory and industry standards, and have sufficient financial responsibility.

When determining an applicant’s suitability, the Registrar will review an applicant’s professional reputation and consider whether there is reason to believe that an applicant is likely to act in a way that:

• Puts the public interest at risk;
• Would undermine public confidence in the mortgage broker industry or bring the mortgage broker industry into disrepute;
• Indicates the applicant may be unwilling to act in accordance with regulatory standards of the Mortgage Brokers Act, the Mortgage Brokers Act Regulations, and the industry;
• Is dishonest; or
• Lacks sufficient financial responsibility.

These general considerations are discussed below in more detail.

(b) Education and Experience

Applicants must establish that they have met or exceeded the Registrar’s requirements pursuant to section 4 of the Mortgage Brokers Act Regulations. Those requirements are published on BCFSA’s website.

(c) Honesty and Candour

Honesty and candour with the Registrar’s staff and the registrant’s clients is a core requirement of mortgage brokers. Registrants act to better their client interests in some of the most important and financially impactful decisions they will make in their life. An honest person is truthful, trustworthy, genuine, and candid. A dishonest person deceives or manipulates the truth by lying, misrepresenting facts, or omitting important facts.

BCFSA and the Registrar require all mortgage broker applicants and registrants to:

• Answer questions truthfully and completely;
• Respond in a timely manner; and
• Disclose all relevant information when answering questions, even if not specifically requested.

BCFSA and the Registrar place significant weight on an applicant’s cooperation, honesty, and candour during the application process.

Providing false or incomplete information to the Registrar’s staff may affect an applicant’s suitability to be registered and may result in the refusal of, suspension, or cancellation of registration. Applicants are advised to read the application questions carefully, and to contact their Designated Individual and BCFSA if uncertain about how to provide a clear response to a question or issue.

(d) Willingness to Act in Accordance with Regulatory and Industry Standards

Mortgage brokers are expected to conduct themselves in compliance with the standards of the mortgage broker industry. This includes:

• Fulfilling fiduciary obligations when they arise and acting in the best interest of clients, particularly ahead of their own;
• Providing competent services;
• Being knowledgeable in their area of work including relevant legal, legislative, and practical considerations;
• Acting ethically;

• Being accountable and taking responsibility for their actions;
• Protecting confidentiality of client or personal information; and
• Treating BCFSA, the Registrar, clients, other registrants, and third parties with civility, respect, and business courtesy.

In addition, registrants are expected to comply with the Mortgage Brokers Act, the Mortgage Brokers Act Regulations, and the regulatory statements of the Registrar, as well as any other legislation and regulatory requirements of any other industry regulators with whom they are members. Therefore, applicants must satisfy the Registrar that they:

• Accept the responsibilities and limits imposed on registrants, including any additional responsibilities and limits required of Designated Individuals;
• Adhere to legislative requirements and orders or directions of regulators with whom they are members, subject to appropriate avenues for review; and
• Respond to regulators and BCFSA in a timely, respectful, and responsive manner.

An applicant’s history of compliance with the standards of other industries and the requirements of other regulatory regimes will be considered in determining an applicant’s suitability and will be considered in the context of whether a registration is objectionable, as discussed below.

(e) Bankruptcies and Consumer or Division I Proposals

(i) Personal Bankruptcy, Consumer or Division I Proposal, Unpaid Judgments, and Arrears

Mortgage brokers work with their clients to help them make decisions often involving significant amounts of money and can be involved in the actual handling of those funds. Therefore, an applicant’s lack of financial responsibility may demonstrate a lack of suitability.

If the applicant has been discharged from bankruptcy or fully performed a consumer or division I proposal (“proposal”), that will not, on its own, necessarily prevent them from being registered so long as they can demonstrate that the bankruptcy or performed proposal does not render them unsuitable.

If the applicant has been discharged from bankruptcy, BCFSA will require a copy of the certificate of discharge under the Canadian Bankruptcy and Insolvency Act. If the applicant has fully performed the proposal, BCFSA will require a copy of the certificate of full performance of proposal made under the Canadian Bankruptcy and Insolvency Act. If the discharge or performed proposal is more than seven years old and the applicant no longer has access to the necessary documents, they may be asked to provide a written disclosure of the date of discharge or certificate of completion. Regardless of whether the applicant is discharged or whether they have completed their proposal, BCFSA will require them to provide a copy of their statement of affairs made under the Canadian Bankruptcy and Insolvency Act, which is available from the trustee or administrator. If the bankruptcy occurred in another country, BCFSA will require the equivalent of these documents from that jurisdiction.

An applicant’s insolvency history might not preclude them from registration but may result in the imposition of conditions if the Registrar believes they are suitable and not objectionable but is still concerned about the risk they may pose to the public. An example of such conditions may include being prohibited from handling trust funds.

For undischarged bankruptcies or incomplete proposals, the applicant will need to provide clear and cogent evidence why they should be registered despite the bankruptcy or proposal. In all such cases, the Registrar is likely to at least require supervisory conditions.

Regardless of whether an applicant is discharged or has completed their proposal, BCFSA will inquire about the circumstances behind the bankruptcy or proposal. Those circumstances will be assessed against the other elements discussed in this document including honesty, candour, compliance with regulatory and legal obligations, good reputation, and objectionability.

Where the bankruptcy is recent and arises from the applicant’s own financial mismanagement, as opposed to events outside their control like the death of a spouse, the applicant might not be registered unless they can demonstrate they have been rehabilitated by showing a post discharge history of financial responsibility.

If the applicant is not applying to become a Designated Individual and there is no evidence of other conduct that might render an applicant unsuitable, the Registrar may register an applicant despite a previous bankruptcy or a proposal. Conduct that might render an applicant unsuitable includes other bankruptcies or proposals or conduct inside or outside the insolvency process. However, in all instances BCFSA will inquire about the circumstances of a bankruptcy or proposal.

If an applicant applies for registration as a Designated Individual or to act as a director, given the regulatory responsibilities of Designated Individuals and the corporate responsibilities of a director, a proposal or bankruptcy may reflect adversely on an applicant’s suitability. Therefore, as part of the Registrar’s assessment of an applicant’s suitability to be registered as a Designated Individual or director/officer, the applicant authorizes BCFSA to perform a credit check to assess the applicant’s financial circumstances.

An applicant will not be registered as a Designated Individual or permitted to act as a director if the credit report indicates that the applicant has:

• An undischarged bankruptcy (note that the Business Corporations Act precludes undischarged bankrupts from acting as corporate directors);
• Not met in full the conditions of an outstanding proposal;
• Outstanding judgments against them; or
• Arrears on trade accounts.

(ii) Business Bankruptcy

If an applicant was an owner, director, officer, or partner of a business that was subject to bankruptcy, insolvency, receivership, or Companies’ Creditors Arrangement Act proceedings while the applicant held that position, BCFSA may request further information regarding the applicant’s involvement in the business and the circumstances of the bankruptcy, insolvency, or receivership to assess suitability.

(f) Civil Judgments and Pending Litigation

Applicants must disclose whether they have had any judgments rendered against them, including any business in which they were an officer, director, or partner, for any reason whatsoever from any civil court, board, or tribunal in British Columbia or other jurisdictions. This includes foreclosure proceedings. If a judgment has been rendered against an applicant, they should explain whether the judgment has been satisfied. If a judgment has not been satisfied, the applicant must state the amount outstanding and describe any repayment arrangements for each outstanding judgment. In either case, the applicant must describe the circumstances giving rise to the judgment.

Applicants must also disclose whether there are any pending legal proceedings against them. Civil proceedings brought against an applicant will name the applicant as a defendant or respondent. They include foreclosure proceedings and proceedings brought before boards or tribunals like the BC Human Rights Tribunal. Any legal proceeding is no longer pending once the court or tribunal has rendered a judgment, or the proceeding has been permanently stayed, discontinued, or dismissed. For any pending legal proceedings against the applicant, they must describe the claim made against them and the remedies sought and provide a copy of any statement of claim or defence. BCFSA may undertake an inquiry into the circumstances of the claim to determine if they raise issues regarding the applicant’s suitability or objectionability.

Applicants may be registered despite previous judgments or orders and pending litigation. The Registrar will consider such litigation on a case-by-case basis. The Registrar will place particular scrutiny on cases where the nature of the claim could adversely impact public interest, public confidence in the mortgage broker industry, or the reputation of the mortgage broker industry. These include, for example, claims that involve dishonesty or a lack of integrity (fraud, misappropriation, fraudulent misrepresentation, conversion) or abuse of positions of power or authority (breach of trust, breach of fiduciary duty). In such cases, the processing of an application may be delayed until BCFSA completes its investigation and the Registrar makes a decision on the application. If the application is for a renewal, the Registrar may require conditions on the registration, including requiring prompt updates of the status of the proceeding.

Civil judgments, orders, and pending litigation may also be considered under “Objectionability” below. When assessing how civil judgments impact an applicant’s suitability, the Registrar considers the same factors as set out under “Objectionability” below regarding criminal convictions.

(g) Criminal Charges

Criminal charges are considered on a case-by-case basis. Where the applicant has an outstanding criminal charge, BCFSA will investigate the circumstances surrounding the charge and may wait to decide whether to register the individual until the criminal matter resolves. The matter is resolved once the charge is withdrawn, a finding of guilt or an acquittal is entered, a sentence is imposed, and all appeal avenues have been resolved. Because there is a different standard of proof in criminal cases compared to a registration decision before the Registrar, an acquittal or stay might not resolve the issue of the applicant’s suitability and objectionability.

Where the applicant has a previously resolved criminal charge, BCFSA will investigate to determine how that was resolved and the circumstances of the underlying conduct. BCFSA may also investigate matters resolved by peace bond where no charge is laid. If BCFSA’s investigation or the application reveals a previous conviction, that will be dealt with as discussed below in relation to objectionability. If the application is for a renewal, the Registrar may require conditions on the registration, including requiring prompt updates of the status of the criminal proceeding. The Registrar considers it crucially important that registrants provide prompt, timely, honest, and candid updates on any criminal proceedings, particularly where the registrant’s conditions require updates.

Although BCFSA and the Registrar take all criminal charges seriously, they place particular scrutiny on charges whose nature suggests that issuing a registration could adversely impact the public interest, public confidence in the mortgage broker industry, or the reputation of the mortgage broker industry. For example, charges that involve dishonesty and lack of integrity (fraud, forgery, theft), abuse of positions of power or abuse of the vulnerable (extortion, crimes against children), or charges involving crimes against a person (assault) may preclude registration. The processing of an application will be delayed until BCFSA completes its investigation and the Registrar makes a decision on the application.

The Registrar considers the same factors as set out under “Objectionability” below when assessing how criminal convictions impact an applicant’s suitability.

(2) Objectionability – Section 4(a) of the Mortgage Brokers Act

Section 4(a) of the Mortgage Brokers Act states that the Registrar must grant a registration or renewal if, in the opinion of the Registrar, the applicant is suitable for registration and the applicant’s registration is not objectionable.

An applicant’s registration is not objectionable if they are suitable, it will not bring the mortgage broker industry into disrepute, and it will not harm the public interest.

When submitting a registration application, the Registrar requires applicants to disclose if they have:

• Been refused a licence by a regulatory or professional body in British Columbia or another jurisdiction;
• Held a licence that was suspended or cancelled by a regulatory or professional body in British Columbia or another jurisdiction;
• Been disciplined by a regulatory or professional body or are currently under investigation by a regulatory or professional body;
• Judgments issued against them;
• Pending litigation against them; or
• Been convicted of an offence or are currently charged with an offence.

The Registrar considers regulatory or professional bodies to include any organization engaged in professional or industry licensing or regulation in any jurisdiction. This includes regulatory bodies (e.g., BCFSA, BC Securities Commission, Law Society of British Columbia, College of Physicians and Surgeons of BC), the government, and professional associations that carry out regulatory functions (e.g. real estate member boards). Some discussion of the requirement to adhere to the regulatory framework of other regulatory bodies is noted above regarding suitability. Those points apply to whether an applicant’s proposed registration is objectionable as well.

The disclosures required regarding civil litigation and judgments are discussed above. Civil litigation matters may disclose both suitability and objectionability issues and the Registrar may inquire into the circumstances surrounding judgments and litigation.

(a) General Factors

A past licence or registration refusal/suspension/cancellation, disciplinary sanction, civil claim, or criminal conviction will not necessarily be a bar to registration. However, public confidence in the mortgage broker industry requires registrants to respect and comply with the law. The Registrar considers convictions under any law of any country when evaluating a person’s respect for the law.

If an applicant has engaged in conduct that resulted in a refusal to license or register, a suspension or cancellation of a license or registration, disciplinary sanction, a civil claim or order, or a criminal conviction (the “Conduct”), the Registrar will consider the following, non-exhaustive factors to determine whether an applicant’s registration is objectionable:

• The nature, circumstances and duration of the Conduct, and whether the Conduct, if repeated, could pose a risk to the public, pose a threat to a brokerage’s ability to carry on its business safely and efficiently, undermine public confidence in the mortgage broker industry or bring the reputation of the industry into disrepute;
• Circumstances and particulars surrounding the Conduct, including the applicant’s age at the time of the Conduct and whether there were any extenuating circumstances;
• Recency of the Conduct;
• Evidence of applicant’s rehabilitation and likelihood the applicant will repeat the Conduct (as outlined below);
• The applicant’s conduct in the course of resolving legal proceedings arising from the Conduct;
• Sentence, penalty, judgment, or sanction imposed;
• If the applicant has been convicted of an offence, the seriousness of the offence, including its maximum penalty and whether it is punishable on indictment or summary conviction;
• The applicant’s honesty and candour through the application process;
• Applicant’s professional or business activities since the Conduct; and
• Reliability of the information provided for the purpose of assessing these factors.

(b) Rehabilitation Factors

When determining whether an applicant has been rehabilitated after the Conduct, the Registrar will consider the circumstances of the Conduct, the time since the Conduct occurred, and what the applicant has done since the Conduct. Below is a non-exhaustive list of criteria the Registrar may consider. The Registrar may consider whether the applicant:

• Paid restitution or damages to any person harmed by the Conduct;
• Successfully completed or was discharged early from probation or parole;
• Corrected the business or other practices that created a risk of harm to others;
• Obtained treatment for addiction or substance use conditions that contributed to the Conduct, based on evidence from physicians or other persons competent to testify in that regard;
• Obtained treatment for mental health conditions that contributed to the Conduct, based on evidence from physicians or other persons competent to testify in that regard;
• Completed or is enrolled in formal education or training courses for professional- or self-improvement;
• Volunteers or volunteered with programs designed to provide social benefits;
• Fulfills their personal responsibilities; and
• Demonstrates a change in attitude from when the Conduct occurred, including whether they acknowledge and appreciate the Conduct, the Conduct’s seriousness, the circumstances that lead to the Conduct, and the impact of the Conduct on victims and the public, as evidenced by any or all of the following:

• The applicant’s own testimony;
• The testimony of persons who know of the Conduct and are familiar with the applicant’s subsequent and current attitudes and behaviour; and
• Testimony or statements from probation officers, parole officers or law enforcement officials competent to testify as to the applicant’s social adjustments.

(3) Opportunity to be Heard

If an applicant does not satisfy the Registrar that they are suitable to be registered and that their registration is not objectionable, the Registrar may refuse to grant or renew the registration under section 4(b) of the Mortgage Brokers Act. Before refusing to register the applicant, the Registrar will provide the applicant an opportunity to be heard.

An opportunity to be heard is provided to determine whether an applicant is suitable and if their registration is not objectionable. If they are determined not to be suitable or if their registration is determined to be objectionable, the opportunity to be heard process may also address when the applicant may reapply.

(4) Conditions

If the Registrar is satisfied that the applicant for a new registration has met the requirements of section 4 of the Mortgage Brokers Act but considers that conditions on the applicant’s registration are necessary, the Registrar may impose conditions on the registration under section 4(c) of the Mortgage Brokers Act. Before imposing those conditions, the Registrar will advise the applicant of the proposed conditions and will provide the applicant an opportunity to respond regarding the proposed conditions.

The conditions imposed on the applicant’s registration may include restricting the registration to a particular brokerage, supervision of the applicant by their brokerage’s Designated Individual, scheduled reports from the supervising Designated Individual, or other measures intended to protect the public, increase confidence in the mortgage industry, and avoid damage to the reputation of the mortgage industry.

If the applicant cannot demonstrate that they are suitable and that their registration is not objectionable they will not be registered. If an applicant meets those criteria but the Registrar still has concerns, the Registrar has broad jurisdiction to impose conditions to protect the public, protect the reputation of and public confidence in the mortgage industry, and guard against repeat offending.

(5) Criminal Record Checks

Applicants for initial registration and registration renewal must provide BCFSA with a current PDF of the original criminal record check dated not more than six months prior to the date of application.

An applicant may obtain a criminal record check based on their name and date of birth by attending at their local police station or a division of the Canadian Corps of Commissionaires, or by applying online using Triton Canada. Applicants must complete a “Third Party Waiver of Consent” form which authorizes the police authority to send the criminal record check directly to BCFSA by uploading the PDF into IRIS. In circumstances where a criminal record check based on the name and date of birth of the applicant shows a significant criminal record or the Registrar has concerns over the identity of the applicant, the applicant may be required to obtain a criminal record check based on the applicant’s fingerprints.