Where a licensee arranges a mortgage in which another person will be the mortgagee, the licensee must provide the required lender information statement to that person unless a specific exception applies. A private lender may be represented by the licensee, represented by another licensee, or unrepresented. Representation status does not, by itself, remove the lender-information-statement requirement.

Legislative Framework

Section 8 of the Mortgage Services Act applies where a licensee:

1. arranges a mortgage in which another person is to be the mortgagee;
2. arranges the sale of a mortgagee’s interest in a mortgage; or
3. sells the licensee’s own interest as mortgagee under a mortgage to another person,

and is required by the Rules to provide the other person with an information statement.

The consequence of non-compliance is significant: despite any applicable agreement, the intended mortgagee or purchaser is not obligated to advance funds unless the licensee provides the information statement in accordance with the Rules.

Section 73 of the Mortgage Services Rules requires the licensee to provide the information statement:

• if funds are paid into trust: on or before the release of funds from trust at the lender’s direction; or
• if funds are not paid into trust: on or before the lender advances the funds.

The information statement must:

• be in a form approved by the Superintendent;
• contain the information required by the Superintendent;
• be accompanied by any documents required by the Superintendent;
• be dated and signed by the licensee; and
• contain disclosure that is true, plain and not misleading.

Two Practical Scenarios

Scenario 1 — Private Lender Is Represented by the Licensee

A private lender engages a mortgage brokerage to identify and arrange a mortgage investment. The lender is the licensee’s client and will be the mortgagee under the proposed mortgage.

Result: The licensee must provide the lender information statement before the lender advances funds or, if the funds are held in trust, before they are released from trust at the lender’s direction.

The licensee must also comply with the client-relationship duties applicable to the engagement, including the requirements concerning representation disclosure, suitability, material-risk disclosure and remuneration disclosure, as applicable.

Scenario 2 — Private Lender Is Unrepresented

A mortgage brokerage is engaged by the borrower. The brokerage introduces a private lender to the transaction and arranges the mortgage. The private lender is not the brokerage’s client and has not retained another licensee.

Result: The licensee must still provide the lender information statement to the private lender before the lender advances funds or directs the release of trust funds. The fact that the lender is unrepresented does not create an exception to the lender-information-statement requirement.

In addition, before providing mortgage services to or on behalf of an unrepresented lender, the licensee must give the prescribed disclosure explaining:

• the risks of receiving assistance from a licensee whose duties are owed to another client;
• the limited assistance the licensee may provide; and
• the recommendation that the unrepresented lender obtain independent professional advice.

Limited Exceptions

The lender-information-statement requirement does not apply where:

1. the other person is a permitted person or the licensee’s related mortgage brokerage;
2. the mortgage obligation forms part of a mortgage pool offered as a security and is fully guaranteed by the Government of Canada or a provincial government; or
3. an offering memorandum or prospectus has been provided to the other person in accordance with the Securities Act.

There is no exception based solely on whether the lender is represented, unrepresented, sophisticated, or introduced by another party.

Required Practice

Before arranging funding from a private lender, the brokerage should confirm and document:

1. whether the transaction falls within section 8 of the Mortgage Services Act;
2. whether a section 73 exception applies;
3. whether the Superintendent-approved lender information statement and required supporting documents have been completed;
4. whether the statement has been dated and signed by the licensee;
5. whether the statement will be delivered before the applicable funding deadline; and
6. where the lender is unrepresented, whether the required unrepresented-party risk disclosure has also been delivered.

Takeaway

The operative question is not, “Does the broker represent the lender?” The operative question is, “Has the licensee arranged a mortgage transaction in which this person will be the mortgagee?”

If the answer is yes, the lender information statement must be provided unless one of the express statutory exceptions applies.

Authorities

• Mortgage Services Act, section 8 — effect of failure to provide information statement
• Mortgage Services Rules, sections 68–73 — representation, unrepresented parties, suitability and lender information statements
• Mortgage Services Rules, section 73 — information statement to lender
• Mortgage Services Act — provisions, including section 8, come into force October 13, 2026

The post Form 5 Lender Information Statements Under the BC Mortgage Services Act first appeared on Canadian Association of Private Lenders.

A recent Ontario Superior Court of Justice decision highlights potential consumer-law and lending-law risks arising from automatic mortgage renewal practices.

In Abeywickrama v. The Bank of Nova Scotia et al, 2026 ONSC 3262, released June 4, 2026, the Court certified a proposed class action against The Bank of Nova Scotia (“Scotia”). The claim alleges systematic breaches of section 8 of Canada’s Interest Act, R.S.C., 1985, c. I-15.

Section 8 provides:

No fine, etc., allowed on payments in arrears

8 (1) No fine, penalty or rate of interest shall be stipulated for, taken, reserved or exacted on any arrears of principal or interest secured by mortgage on real property or hypothec on immovables that has the effect of increasing the charge on the arrears beyond the rate of interest payable on principal money not in arrears.

The Facts Alleged in Abeywickrama

The plaintiff, Ms. Abeywickrama, and her husband entered into a five-year closed fixed rate mortgage with Scotia in 2018 to purchase their first home in Saskatoon. The mortgage carried an interest rate of 3.34% and was scheduled to mature on August 22, 2023.

As the maturity date approached, Ms. Abeywickrama decided not to renew with Scotia after obtaining more favourable terms from another lender. In or about June 2023, she advised Scotia that she did not plan to renew the mortgage. On or about July 21, 2023, she and her husband signed a payout request authorizing their preferred mortgage lender to take all steps necessary to discharge the 2018 mortgage by paying the outstanding balance before maturity.

Scotia telephoned Ms. Abeywickrama to remind her of the upcoming maturity date. It also sent a letter dated July 18, 2023, as required by banking legislation, identifying the mortgage maturity date, outlining end-of-term options and describing the automatic renewal provision.

Although Ms. Abeywickrama signed the mortgage payout request form in July, Scotia did not receive it until August 17, 2023. On Monday, August 21, 2023, at 12:01 p.m., Scotia advised the preferred lender that it could not process the payout request because it could not verify the signatures of Ms. Abeywickrama and her husband. The mortgage was therefore not paid out at maturity.

On August 22, 2023, without further notification to Ms. Abeywickrama, Scotia automatically renewed the 2018 mortgage into a fixed-rate, six-month closed term at an interest rate of 7.75%. Her monthly payments increased by approximately 42%.

After learning of the automatic renewal, Ms. Abeywickrama took immediate steps to discharge the Scotia mortgage and change lenders. While the discharge process was underway, she made the first monthly payment under the renewed mortgage. To discharge the six-month autorenewed mortgage, she paid Scotia the stipulated penalty of $5,456.94.

Ms. Abeywickrama then complained to Scotia. Scotia’s Customer Complaints Appeals Office (“CCAO”) declined to reimburse either the interest paid under the autorenewed mortgage or the penalty payment. Following a recommendation from the Banking Ombuds Office, Scotia offered a good-faith payment of $1,100 conditional on Ms. Abeywickrama signing a release. She rejected that offer.

The Court’s Certification Decision

The Court concluded that the plaintiff may be able to establish at trial that Scotia’s autorenewal practices violate section 8 of the Interest Act. The claim alleges that the automatic renewal structure imposed a substantially increased interest rate and a prepayment penalty after the original mortgage reached maturity, resulting in an unjust enrichment of the bank.

Certification does not determine whether Scotia is liable. It does, however, permit the claim to proceed as a class action on behalf of eligible class members, who may seek damages if the alleged practices are ultimately found to contravene section 8.

A Developing Area of Mortgage Litigation

This is not the first class proceeding to raise concerns about mortgage renewal practices. In 2024, Haventree Bank faced a similar class action lawsuit and settled the claim for $1.5 million.

The Abeywickrama decision is a useful reminder for lenders to review automatic renewal provisions, maturity-date procedures, payout administration processes and prepayment-charge practices. In particular, lenders should consider whether the combined effect of an automatic renewal at a higher interest rate and a discharge penalty could be characterized as increasing the charge on arrears beyond the interest rate otherwise payable on principal not in arrears.

For borrowers, the decision underscores the importance of beginning the refinancing and payout process well before a mortgage maturity date, confirming that all signatures and discharge documents have been received and accepted, and carefully reviewing the consequences of any automatic renewal provision.

Aron Hochhauser
Fulton & Company Law Corporation
960-1055 W. Georgia Street
Vancouver, BC V6E 0B6
T: 604.900.3104

The post Mortgage Auto Renewal: Ontario Court Certifies Class Action Against Scotia first appeared on Canadian Association of Private Lenders.

The letter focuses on the practical impact of the transition for exempt market dealers (EMDs) involved in NQSMI distributions, including the expected narrowing of exemptions and the resulting need to ensure any “mortgage services” activities are conducted by appropriately licensed entities. We also ask for guidance on whether an affiliated-entity structure—where one related entity handles securities distribution as an EMD and another related entity conducts mortgage services as an MSA licensee—can be used as a compliant model, and what BCFSA’s expectations may be regarding roles, disclosures, supervision, and controls.

We are sharing this correspondence to keep members informed and to support proactive planning for the MSA transition.  — letter below—-

Todd Healey
Practice Standards Advisor

BC Financial Services Authority
600-750 West Pender Street
Vancouver, BC V6C 2T8
Phone: 604.660.3555 | Toll-free: 1.866.206.3030
www.bcfsa.ca

Re: Request for confirmation – treatment of non-qualified syndicated mortgages (NQSMs/NQSMIs) under the Mortgage Brokers Act and Mortgage Services Act; applicability to exempt market dealers and affiliated-entity models

Dear Mr. Healey:

I am writing on behalf of the Canadian Association of Private Lenders to request confirmation of our understanding of the regulatory framework applicable to non-qualified syndicated mortgages (“NQSMs”) in British Columbia, including the expected shift from the Mortgage Brokers Act (“MBA”) to the Mortgage Services Act (the “MSA”), anticipated to come into force in or around October 2026.

We appreciate that BCFSA administers the mortgage services regime, while the securities distribution of NQSMIs is overseen by the British Columbia Securities Commission (“BCSC”). We recognize that any response may be limited to general guidance and not constitute a binding determination. That said, clarity on the points below would be helpful to industry members as they prepare for the transition to the MSA.

1. Our understanding of the current framework (MBA regime)

Based on our review of the MBA and its regulations, we understand that under the current MBA regime an exempt market dealer (“EMD”) registered under the BC Securities Act may participate in the distribution of NQSMIs without needing to register as a mortgage broker, due to the exemption in MBA Regulation 18(2) that applies to registrants under the securities legislation in connection with syndicated mortgages other than “qualified” syndicated mortgages.

In practice today, we understand the market commonly operates with a split of responsibilities, where:

(a) the EMD conducts investor-facing distribution activity under securities law (including solicitation, suitability, and trade execution under prospectus exemptions); and

(b) a licensed mortgage brokerage and/or administrator originates, registers, and administers the underlying mortgage and provides the applicable mortgage disclosure documentation to borrowers.

1. Our understanding of the future framework (MSA regime)

We further understand that the MSA and its regulations will materially change the mortgage licensing law treatment of EMDs involved in NQSM offerings, including that:

(a) the broad MBA regulatory exemption that has allowed securities registrants (including EMDs) to engage in syndicated-mortgage-related activity without MBA registration/licensing will no longer be available to EMDs once the MSA is in force; and

(b) the MSA regulatory exemption will be more narrowly framed such that only “investment dealers” (CIRO/IIROC investment dealers), while compliant with securities law, will be exempt from MSA licensing for certain specified activities in relation to syndicated mortgages (other than qualified syndicated mortgages), and that EMDs will not be included in that exemption.

We also understand the MSA definition of “mortgage services” is broad and may capture typical EMD-facing activities involved in marketing and selling NQSMIs (including solicitation of lenders/investors, providing information or advice to prospective lenders/investors, and trading in mortgages for others). On that basis, our understanding is that, once the MSA is in force, an EMD that continues to distribute NQSMIs in BC will need to ensure that any “mortgage services” activities are carried out by an appropriately licensed person or entity (or within a specific exemption), and that an EMD acting alone, without an MSA licence, could be offside the MSA even if compliant with securities registration requirements.

1. Confirmation requested

We respectfully request confirmation (or correction) of the following:

(a) Under the current MBA regime, an EMD may distribute NQSMIs without needing mortgage broker registration/licensing under the MBA, due to MBA Regulation 18(2).

(b) Once the MSA is in force, an EMD will not be exempt from MSA licensing for “mortgage services” activities relating to NQSMs (even where the securities distribution is properly conducted under securities law).

(c) The MSA regulatory exemption for syndicated mortgage activity is intended to apply to CIRO/IIROC “investment dealers,” but not to EMDs.

1. Affiliated-entity model – EMD + MSA licensee working together

Assuming the above understanding is correct, we would also appreciate guidance on whether a related-entities structure is acceptable from the perspective of the MSA, where:

(a) one entity (Entity A) is an EMD registered under securities legislation and conducts the securities distribution of the NQSMI (including KYC/KYP/suitability, delivery of offering documentation where applicable, subscription processing, and exempt trade reporting); and

(b) a separate related entity (Entity B) is licensed under the MSA as a mortgage brokerage (and/or other applicable licence class) and performs the “mortgage services” activities (including, as applicable, mortgage solicitation/negotiation, required mortgage disclosures to lenders/investors, mortgage origination/registration, and ongoing administration).

In particular, we request confirmation or guidance on:

(i) whether it is acceptable for “mortgage services” activities to be performed by Entity B (the MSA licensee) while Entity A (the EMD) performs the securities distribution, provided that Entity A and its representatives do not themselves perform “mortgage services” unless appropriately licensed;

(ii) any BCFSA expectations regarding allocation of responsibilities, client-facing disclosures of the two-entity arrangement, supervision and controls for individuals who may hold roles with both entities, and how communications to investors should be structured to avoid an unlicensed person being viewed as providing “mortgage services”; and

(iii) whether, in BCFSA’s view, an entity distributing NQSMIs is expected to obtain both securities registration and MSA licensing within the same legal entity, or whether the affiliated-entity model described above is an acceptable compliance approach.

1. Closing

We would be grateful for any written response you are able to provide, including any guidance you consider relevant for market participants preparing for the transition to the MSA regime.

Please direct any response to:

Samantha Gale
CAPL Chief Executive Officer
s.gale@privatelenderassociation.ca

The post APL Letter to BCFSA: Clarification Request on NQSM/NQSMI Treatment Under the Mortgage Services Act Transition first appeared on Canadian Association of Private Lenders.