Mortgage sector hit hard by Ontario regulator for fraudulent documents, licence issues and other infractions

Enforcement action grew in the 2024-2025 fiscal year, with 100 enforcement actions initiated up from 65 the previous year, the report said. The mortgage sector continues to be the most active, followed by life and health insurance. Thirty-two investigations were undertaken, with 21 being in the mortgage sector. 

“These two sectors are where there are individual licensees, so mortgage brokers and agents and insurance agents, those are people who have a licence to carry out business and they’re dealing more directly with consumers with respect to critical and often very complicated financial products,” said Elissa Sinha, director of litigation and enforcement at FSRA.

“So, it’s not surprising that there would be more enforcement needed in those two sectors.”

In recent years, the province has also granted FSRA the authority to apply stronger sanctions, including monetary penalties, Sinha added.

These legislative changes, which include amendments to the Mortgage Brokers, Lenders and Administrators Act, took effect in February 2022 and significantly increased maximum penalties.

Maximum monetary penalties rose from $10,000 to $100,000 for individual agents and brokers, and from $20,000 to $500,000 for brokerages.

A total of $1.2 million in monetary penalties were applied in the 2024-2025 fiscal year, with the vast majority imposed in the mortgage sector.

However, revoking or refusing a licence remains one of the most “effective and proactive types of enforcement available,” Sinha said. There were 25 orders to revoke and refuse licences in the mortgage and insurance sectors.

Acting without a licence, providing poor advice, and giving false information, such as fraudulent mortgage documents, are commons areas for enforcement action, said mortgage broker Kim Lambert. 

FSRA was established to replace the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO). Since its inception in 2019, FSRA continues to ramp up enforcement and “layer in” more regulations and requirements “in regards for people to gain a licence, maintain a licence and enhance their licensing,” Lambert said. 

As more consumers turn to mortgage brokers instead of banks, there’s more scrutiny on mortgage professionals from the regulator, she added. 

Private lending is also a growing space for mortgage borrowers and in the last few years FSRA has mandated brokers need more experience to work in private lending. 

“If you’re a broker with under two years experience you cannot be licensed in that space,” Lambert said. “They’re trying to regulate and say, “Hey, you can only deal in that space if you are more tenured and more educated. ”

Previous to this mandate any mortgage agent could work in private lending, causing “a lot of errors,” she added.

David Carter, partner at Grechi Carter, a Toronto-based real estate law firm, said private lending has always been regulated but before FSRA enforcement was “much less serious.” 

“Our firm does a lot of private lending work for MICs and other groups,” he said. “There were so many people who were administrating and acting on behalf of groups of lenders without licences.” 

Now, FSRA has a clear mandate to “clean things up,” ensuring everyone has to follow the rules, otherwise regulatory bodies will “come down hard if there are any breaches.”

While Carter believes there are likely fewer violations occurring in the mortgage industry now, there are more regulatory proceedings because of the increase in enforcement.

“They’re trying to go after as much as they can because that wasn’t happening before,” he said.