How will British Columbia’s transition to the Mortgage Services Act affect exempt market dealers involved in non-qualified syndicated mortgage offerings? The Canadian Association of Private Lenders (CAPL) has written to the BC Financial Services Authority (BCFSA) seeking clarification on the licensing requirements and their implications for industry participants.

The letter asks BCFSA to confirm CAPL’s understanding of the current exemptions and whether exempt market dealers will need mortgage services licensing under the new framework, even when their securities distribution activities comply with securities requirements. It also seeks guidance on whether affiliated entities—one registered as an exempt market dealer and another licensed to provide mortgage services—can work together, and how their responsibilities, disclosures, and supervision should be structured.

These questions remain requests for regulatory confirmation, rather than settled conclusions. BCFSA’s guidance will help members assess their business models and prepare for the transition. CAPL’s letter is reproduced below.

 

 

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.

2. 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.

3. 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.

4. 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 affiliatedentity

model described above is an acceptable compliance approach.

5. 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

Yours truly,

Samantha Gale,