Ottawa Introduces New Bank Rules, but Brokers say They’re not Enough
While mortgage brokers may have thought Finance Minister Jim Flaherty went too far with the mortgage rules he’s put into place the last several years, they think he hasn’t done nearly enough to protect consumers from “mortgage specialists” at banks.
It was last week that Ottawa announced that they were going to be cracking down on the monitoring and enforcement of complaints made about banks; and that those complaints would now be handled by the Financial Consumer Agency of Canada. This is part of the transparency mandate that the Conservative government had been promising for several months.
And while having third-party oversight might keep banks more honest, banks first need to be part of the Ombudsman for Banking Services and Investments (OBSI.) And one of the biggest problems is that certain banks, such as TD and RBC, aren’t part of that organization. Instead, they leave their complaint processes up to a separate third-party, which they could simply fire if they weren’t happy with that organization’s findings.
Brokers are upset because this practice does nothing to protect consumers, and that it doesn’t hold banks up to the same standards and requirements that mortgage brokers are.
“It’s an obvious conflict of interest,” says Steve Garganis, a mortgage broker. “Although some of the most recent reports from OBSI do show that complaints are on the rise – at least reporting is on the rise. But how many of those complaints are addressed and resolved?
“Brokers have a disclosure process and are far more accountable, especially since the Broker’s Act of 2008,” he continues. “These mortgage ‘specialists’ are out there brokering deals for one back – they are in effect mortgage brokers without the accountability. These new regulations offer nothing to keep them and the banks up to our standard.”
But Ottawa states that the new rules for the banks do in fact protect consumers, because it keeps them accountable knowing that the complaint process has been revised.
“Our government is committed to protecting consumers,” said Finance Minister Jim Flaherty in an announcement made along with the changes. “These new rules create a stronger, more independent consumer complaint system, by setting high, pro-consumer standards that all banks and authorized foreign banks must meet.”