CAPL raised two issues with BCFSA: exempt market dealer exemptions and Form 5 lender disclosure requirements. BCFSA has responded with some relief.
In Advisory 26-038, dated October 6, 2026, the BC Financial Services Authority (BCFSA) has advised that the Superintendent of Mortgage Services will exercise regulatory forbearance effective October 13, 2026 in relation to the following two issues under British Columbia’s Mortgage Services Act (MSA) framework:
- The treatment of exempt market dealers providing specified services involving syndicated mortgage securities; and
- The requirement to deliver prescribed Form 5 lender disclosure forms where the recipient is a licensed mortgage lender that has waived receipt.
For businesses within its scope, the announcement offers meaningful regulatory relief. But it is important to understand exactly what that relief does and what it does not do. A regulator’s decision to exercise forbearance is not, by itself, a release from contractual obligations, a defence to misrepresentation, or immunity from a civil claim.
CAPL’s Advocacy: Turning Industry Concerns into Practical Relief
CAPL raised both issues with BCFSA through its letters and helped secure the regulatory response now reflected in the advisory. This is a practical example of the value of focused industry advocacy: identifying requirements that create difficulties in real transactions, putting those concerns before the regulator, and seeking workable relief.
For qualifying exempt market dealers, the measure addresses overlapping licensing requirements for specified syndicated mortgage securities activities. For mortgage licensees dealing with qualifying licensed lenders, it allows the lender to waive prescribed Form 5 Lender Disclosure forms rather than requiring their delivery in every case.
This is the value CAPL brings to the table: a collective voice that turns members’ regulatory concerns into a focused case for change. Participation in CAPL helps bring practical industry experience into the regulatory conversation. The relief also demonstrates why engagement should continue: obtaining a regulatory accommodation is one step; understanding its limits and implementing it properly is another.
What Does “Regulatory Forbearance” Mean?
Regulatory forbearance generally describes a regulator’s decision to refrain from enforcing a requirement, or to administer it on a more permissive basis, in specified circumstances.
Instead of insisting on strict compliance with the ordinary requirement, the regulator identifies conduct it will tolerate, often subject to conditions. Forbearance can help address a transition to a new regulatory regime, an unintended gap in an exemption, or a requirement that adds little protection in a particular setting.
The legal mechanism matters. A formal exemption granted under statutory authority can change whether a requirement applies. An enforcement policy may instead leave the underlying requirement in place while explaining how the regulator intends to respond to non-compliance. Those are not necessarily the same thing.
The advisory describes the Superintendent as extending an exemption for exempt market dealers and permitting an exemption from specified lender disclosures. Businesses should therefore read its operative terms carefully and confirm the legal basis and scope of the relief before relying on it. The label “forbearance” does not, on its own, establish that legislation has been amended or that every legal consequence of the affected conduct has disappeared.
Issue One: Exempt Market Dealers and Syndicated Mortgage Securities
The first measure concerns a difference in the treatment of investment dealers and exempt market dealers.
As described in the advisory, section 3(2) of the Mortgage Services Act Regulation exempts persons registered under the Securities Act in the investment dealer category from licensing under Part 2 of the MSA when they provide certain mortgage services involving securities of syndicated mortgages, other than qualified syndicated mortgages, provided they comply with Securities Act requirements.
The advisory states that the Superintendent will extend that treatment to exempt market dealers registered under the Securities Act that provide the same services involving the same category of syndicated mortgage securities, provided they remain in compliance with the Securities Act.
In practical terms, the measure is intended to allow qualifying exempt market dealers to conduct the specified activities without having to obtain an MSA licence for those activities.
The relief is tied to:
- Registration in the exempt market dealer category under the Securities Act;
- The services covered by the exemption described in the advisory;
- Securities of syndicated mortgages other than qualified syndicated mortgages; and
- Continuing compliance with Securities Act requirements.
Issue Two: Disclosure to Licensed Mortgage Lenders
The second measure concerns prescribed disclosures to lenders.
According to the advisory, section 73 of the Mortgage Services Rules requires a licensee engaging in the activities described in section 8(1)(a) of the MSA to provide a Form 5 lender information statement to the other person identified in that provision. The prescribed documents are:
- Form 5: Disclosure of Information Statement to Lender; and
- Where applicable, Form 5A: Addendum for Construction and Development Mortgages.
The advisory states that the Superintendent will permit an exemption from these requirements where the recipient is a licensed mortgage lender under section 2(d) of the Rules and that lender has waived receipt of the disclosure.
The measure is therefore not a general removal of lender disclosure requirements. It depends on both the recipient’s qualifying status and an actual waiver.
Oral waivers are permitted
The advisory permits a waiver to be given orally or in writing, while recommending a written waiver. It also requires the licensee to document and retain the waiver in accordance with the Rules’ record-keeping requirements.
Permission to obtain an oral waiver does not remove the need to establish that the waiver occurred, who gave it, and what it covered.
A sound record should identify:
- The lender and the basis for confirming its qualifying licence status;
- The transaction or transactions covered;
- Whether the waiver covers Form 5, Form 5A, or both;
- The person giving the waiver and their authority to act for the lender;
- The date and method of the waiver; and
- Any limits or conditions attached to it.
For an oral waiver, a contemporaneous file note and written confirmation to the lender can reduce later disagreement. Silence, familiarity with the lender, or the lender’s commercial sophistication should not be treated as a substitute for obtaining a waiver.
What Civil Liability Does Regulatory Forbearance Leave Unresolved?
The advisory addresses the Superintendent’s regulatory treatment of specified activities. Civil liability involves a different question: whether a borrower, lender, investor, or other claimant has an enforceable claim arising from the transaction.
Those issues can overlap, but they are not interchangeable.
1. Contractual disclosure obligations may continue
A brokerage agreement, lender instruction, financing commitment, investor agreement, or other contract may require delivery of information or documents independently of the Rules.
Similarly, a lender’s waiver of receipt of a prescribed form should not be assumed to waive a separate contractual reporting obligation. The parties should identify which obligations are being waived and which remain in place.
2. Misrepresentation claims remain possible
Forbearance does not authorize false or misleading statements.
A lender or investor may still have a claim arising from inaccurate statements about security, valuation, borrower finances, project progress, conflicts, fees, or other material matters. Omissions may also create exposure where there is a duty to disclose or where withholding information makes an affirmative statement misleading.
3. Negligence and professional duties are not automatically displaced
Where a licensee owes a duty of care, it may still face a negligence claim if its conduct falls below the required standard and causes recoverable loss.
For example, relief from delivering a form does not necessarily excuse careless handling of information the professional has undertaken to verify or communicate. A claimant would still need to establish the relevant duty, breach, causation, and loss.
The advisory and a documented waiver may be relevant to that analysis, particularly when assessing whether delivery of the prescribed form was required. But they do not resolve every question about the quality of the services provided.
4. Securities-law civil exposure is not removed
The exempt market dealer measure expressly depends on Securities Act compliance. It does not create a general safe harbour from securities-law claims or investor remedies.
Depending on the offering documents, purchaser, transaction structure, and statutory conditions, misleading disclosure or failures to meet securities requirements may support private claims. The availability of relief from MSA licensing for specified activities does not answer those separate questions.
5. A regulatory breach and a civil claim are distinct
A breach of a statutory or regulatory requirement does not automatically create a standalone damages claim. The claimant must identify an available cause of action and satisfy its requirements.
Conversely, a regulator’s decision not to enforce a requirement does not necessarily defeat a claim based on contract, negligence, misrepresentation, or another independent legal duty. Regulatory requirements can also be relevant evidence in a civil dispute without being the sole source of liability.
Forbearance should therefore not be treated as either proof of civil liability or a complete defence to it.
What Does a Lender’s Waiver Actually Accomplish?
For the Form 5 lender disclosure measure, a properly obtained waiver is a condition of relying on the stated relief. Its effect should be kept distinct from a release or liability limitation.
A waiver of receipt of Form 5 or Form 5A ordinarily addresses delivery of that document. It should not be assumed to:
- Release existing or future claims;
- Exclude liability for inaccurate information;
- Waive disclosure obligations under a separate contract;
- Bind borrowers, investors, or other third parties; or
- Remove statutory rights that cannot legally be waived.
If parties also want to allocate civil risk, they need to address that separately through carefully drafted contractual terms. Whether a release or exclusion will be effective depends on its wording, the rights involved, the parties’ relationship, and any statutory restrictions on contracting out. A form waiver should not quietly be treated as doing all of that work.
The Bottom Line
The advisory describes targeted relief for two specific issues: MSA licensing treatment for qualifying exempt market dealers engaged in specified syndicated mortgage securities activities, and prescribed disclosure forms for qualifying licensed mortgage lenders that waive receipt.
The measures may reduce regulatory duplication and unnecessary paperwork. They do not remove the need to define the scope of the relief, satisfy its conditions, and preserve evidence of compliance.
Most importantly, regulatory forbearance is not civil immunity. Contracts, truthful disclosure, professional duties, securities obligations, and third-party rights remain separate considerations. Businesses should treat the advisory as a targeted regulatory accommodation—not as permission to dispense with the underlying information, diligence, or accountability that a transaction requires.
For CAPL, this is an advocacy result worth highlighting. Our letters helped secure a practical response to two concrete industry concerns. If your business is affected by mortgage regulation, this is a reason to engage with CAPL: bring forward the issues you encounter, contribute to the industry’s collective voice, and help shape the case for workable regulation.
This post provides general information, not advice on a particular transaction. Before relying on the relief, confirm the operative terms of Advisory 26-038, its effective date, and any subsequent directions.
