Changes to the rules governing mortgage brokers and non-institutional lenders in British Columbia made headlines this week. One notable pending change is the $500,000 maximum penalty for individuals and businesses that violate the rules, which will come into force in late 2023.
But, other than vast penalty increases, what do these new rules mean, and how should lenders and brokers prepare for them?
What will change when the Mortgage Services Act (MSA) comes into force?
These four significant changes are set to head our way.
- Everyone that engages in mortgage lending must be licensed by the MSA unless the rules exempt them.
- The MSA will create new categories that separate individual mortgage brokers, brokerage firms, and lenders. Each will have its own license and set of relevant requirements, conditions and restrictions.
- The MSA will implement conduct and business practice standards for licensees.
- The MSA will have the power to enforce conduct standards and rules. They will also be able to investigate and discipline operators that violate them.
The MSA has been designed to empower the BCFSA to create new rules faster and keep pace with the industry's rate of change. The Canadian mortgage industry is on the cusp of a technical revolution that will see more non-traditional lenders entering the space and offering a broader range of financial products and services. Therefore, incumbent brokers, lenders, and administrators should prepare for thick and fast regulatory change, as the MSA will frequently evolve to remain aligned with the changing landscape.
Effortlessly adapting to regulatory change
According to research, human error is the cause of 69% of violations. The same research says better systems and solutions could prevent many of these non-compliance instances. Yet many businesses still use human-driven processes. With regulatory change set to outpace lenders' and brokers' agility, now is the time to turn to technology to boost compliance capabilities.
FundMore's AI-powered loan origination system automates compliance for lenders and brokers, vastly reducing violation risk - no matter how fast the rules change.
From automating document collection, validation, indexing, and storage, to tracking applications and identifying missing information, FundMore protects businesses from human error and oversight, and eradicates data and document loss. Plus, automated audit trails and compliance reporting dashboards simplify proactive compliance management.
Fully configurable workflows, rules, and processes let FundMore users adapt quickly to fast-changing regulations. And with its vast range of partner integrations, users can automatically validate applicants' financials, property data, and more against high-quality, accurate data.
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