Draft regulation - Mortgage Brokerages: Licensing

DRAFT REGULATION

MORTGAGE BROKERAGES: LICENSING

Note: This is a draft regulation for discussion purposes. Bill 65, the Mortgage Brokerages, Lenders and Administrators Act, 2006, is not yet enacted.

Interpretation

Definitions

1. In this Regulation,

“effective date” means the day on which subsections 2 (2) and 3 (3) of the Act come into force.

Eligibility to be Issued a Licence

Corporations

2. (1) A corporation is eligible to be issued a brokerage licence if all of the following requirements are satisfied:

  1. The corporation was incorporated under an Act of any jurisdiction in Canada.
  2. The corporation has a mailing address in Ontario that is suitable to permit service by registered mail.
  3. The corporation has errors and omissions insurance in a form approved by the Superintendent with extended coverage for loss resulting from fraudulent acts or it has some other form of assurance in a form approved by the Superintendent. The insurance or other assurance must be sufficient to pay a minimum of $500,000 in respect of any one occurrence involving the corporation or any mortgage broker or agent authorized to deal or trade in mortgages on behalf of the corporation and $1 million in respect of all occurrences during a 365-day period involving the corporation or any mortgage broker or agent authorized to deal or trade in mortgages on behalf of the corporation.

(2) Despite paragraph 3 of subsection (1), a corporation that applies for the licence before the effective date is not required to have errors and omissions insurance or other assurance as described in that paragraph at the time of the application, but it must provide the Superintendent with satisfactory evidence that it will have the required errors and omissions insurance or other assurance as of the effective date.

(3) In determining whether a corporation is not suitable to be licensed as a brokerage, the Superintendent shall have regard to the following circumstances:

  1. Having regard to its financial position, the corporation cannot reasonably be expected to be financially responsible in the conduct of its business.
  2. The past conduct of any director or officer of the corporation affords reasonable grounds for belief that the business of the corporation will not be carried on in accordance with the law and with integrity and honesty.
  3. The corporation is carrying on activities that contravene or will contravene the Act or the regulations if the corporation is licensed.
  4. A director or officer of the corporation has made a false statement or has provided false information to the Superintendent with respect to the application for a licence.

Partnerships

3. (1) A partnership is eligible to be issued a brokerage licence if all of the following requirements are satisfied:

  1. The partnership was formed under the law of any jurisdiction in Canada.
  2. The partnership has a mailing address in Ontario that is suitable to permit service by registered mail.
  3. The partnership has errors and omissions insurance in a form approved by the Superintendent with extended coverage for loss resulting from fraudulent acts or it has some other form of assurance in a form approved by the Superintendent. The insurance or other assurance must be sufficient to pay a minimum of $500,000 in respect of any one occurrence involving the partnership or any mortgage broker or agent authorized to deal or trade in mortgages on behalf of the partnership and $1 million in respect of all occurrences during a 365-day period involving the partnership or any mortgage broker or agent authorized to deal or trade in mortgages on behalf of the partnership.

(2) Despite paragraph 3 of subsection (1), a partnership that applies for the licence before the effective date is not required to have errors and omissions insurance or other assurance as described in that paragraph at the time of the application, but it must provide the Superintendent with satisfactory evidence that it will have the required errors and omissions insurance or other assurance as of the effective date.

(3) In determining whether a partnership is not suitable to be licensed as a brokerage, the Superintendent shall have regard to the following circumstances:

  1. Having regard to its financial position, the partnership cannot reasonably be expected to be financially responsible in the conduct of its business.
  2. The past conduct of any partner affords reasonable grounds for belief that the business of the partnership will not be carried on in accordance with the law and with integrity and honesty.
  3. The partnership or any partner is carrying on activities that contravene or will contravene the Act or the regulations if the partnership is licensed.
  4. A partner has made a false statement or has provided false information to the Superintendent with respect to the application for a licence.

Sole proprietorships

4. (1) A sole proprietorship is eligible to be issued a brokerage licence if all of the following requirements are satisfied:

  1. The proprietor is a resident of Canada.
  2. The sole proprietorship has a mailing address in Ontario that is suitable to permit service by registered mail.
  3. The sole proprietorship has errors and omissions insurance in a form approved by the Superintendent with extended coverage for loss resulting from fraudulent acts or it has some other form of assurance in a form approved by the Superintendent.  The insurance or other assurance must be sufficient to pay a minimum of $500,000 in respect of any one occurrence involving the sole proprietorship or any mortgage broker or agent authorized to deal or trade in mortgages on behalf of the sole proprietorship and $1 million in respect of all occurrences during a 365-day period involving the sole proprietorship or any mortgage broker or agent authorized to deal or trade in mortgages on behalf of the sole proprietorship.

(2) Despite paragraph 3 of subsection (1), a sole proprietorship that applies for the licence before the effective date is not required to have errors and omissions insurance or other assurance as described in that paragraph at the time of the application, but it must provide the Superintendent with satisfactory evidence that it will have the required errors and omissions insurance or other assurance as of the effective date.

(3) In determining whether a sole proprietorship is not suitable to be licensed as a brokerage, the Superintendent shall have regard to the following circumstances:

  1. Having regard to its financial position, the sole proprietorship cannot reasonably be expected to be financially responsible in the conduct of its business.
  2. The past conduct of the proprietor affords reasonable grounds for belief that the business of the sole proprietorship will not be carried on in accordance with the law and with integrity and honesty.
  3. The sole proprietorship or the proprietor is carrying on activities that contravene or will contravene the Act or the regulations if the sole proprietorship is licensed.
  4. The proprietor has made a false statement or has provided false information to the Superintendent with respect to the application for a licence.

Licensee's Name

Licensed names

5. (1) A corporation, partnership or sole proprietorship may be licensed as a brokerage in its legal name and, if applicable, in one other name that is registered to it under the Business Names Act.

(2) Despite subsection (1), a corporation, partnership or sole proprietorship may not be licensed in a name that the Superintendent reasonably believes is,

  1. the same as or similar to the name of another brokerage such that the use of that name by two brokerages would be likely to confuse or mislead the public; or
  2. objectionable on any public grounds.