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A man walks past homes for sale displayed in the windows of a Realtor's office in Vancouver. Mortgage brokers in British Columbia have been advocating that their industry can regulate itself in a way similar to real estate agents.

DARRYL DYCK/The Globe and Mail

When the provincial watchdog in charge of mortgage brokers concluded that a Chilliwack broker had altered a client's tax documents as part of an application for financing, the offender agreed last month to pay $4,000 and was kicked out of the industry for 10 years.

The penalty stands in stark contrast to a similar case involving a real estate agent who admitted to forging a client's signature. That industry's self-regulating body, the Real Estate Council of British Columbia, levied a fine of $1,250 and a suspension of four months.

Mortgage brokers in British Columbia, who act as a go-between for clients and lenders, have been advocating for several years that their industry is mature enough to be able to regulate itself in a way similar to real estate agents.

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But with heightened scrutiny surrounding the council's effectiveness and accountability to the public, Carolyn Rogers, CEO of the provincial government's Financial Institutions Commission, said her office is proposing more, not less, government oversight of the fiercely competitive mortgage industry.

"The mortgage broker industry has a ways to go before they're ready to be self-regulating," she said in an interview with The Globe and Mail. "I use a mortgage broker, I believe in the industry, but it is an industry [where] the structure of the business and the structure of how mortgage brokers are remunerated can create conflicts of interest – unless it's closely monitored.

"So we're proposing increased transparency for exactly some of the same concerns that we're seeing in the real estate sector."

Ms. Rogers was referring to her agency's contentious plan to force brokers to disclose the exact amount of their commissions in the coming months.

Many brokers argue that there is no problem with the current rules, under which they must tell clients they are being paid by a bank or mortgage lender, but don't have to reveal exactly how much they make on a deal.

FICOM currently regulates about 3,400 registered brokers. In 2005, the Real Estate Council of B.C. took over the regulation and licensing of real estate agents from the commission.

A recent Globe and Mail investigation revealing dubious practices, and the weak penalties for agents using such techniques, has precipitated an ongoing review of such regulation by an independent panel led by Ms. Rogers.

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Samantha Gale, CEO of the Mortgage Brokers Association of British Columbia, which has more than 1,800 members across the province, said her industry has matured to the point where it can effectively self-regulate – a request that it has made repeatedly to the provincial government in recent years.

"First of all, what needs to happen is a look at the facts and ... if you look at the record, you will see that the Real Estate Council is a fairly competent regulator," Ms. Gale said.

She said her organization hopes the B.C. Finance Ministry's current review of the Mortgage Brokers Act, which passed in 1996, will conclude that self-regulation is in everyone's best interest.

"The advantage to the public is you have a regulator who is equipped to understand how the business works," Ms. Gale said. "Would you have government regulation of the medical profession? How would they be able to make assessments and determinations?"

Finance Ministry spokesman Jamie Edwardson said a decision on self-regulation is not forthcoming any time soon, as staff are still analyzing the feedback from the latest stage of the review, which began in 2012.

Vancouver MLA David Eby, opposition housing critic, said mortgage brokers provide great advice to consumers and are an integral part of the housing system, but brokers should not view the Real Estate Council as a model regulator.

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"It's been an ongoing disaster for consumers and it has dragged the reputation of hard-working realtors through the mud," Mr. Eby said. "No politician has any appetite for increasing the self-regulation of any aspect of the real estate industry right now."

Ms. Rogers said her agency has more than 20 people investigating misconduct in all the sectors it covers: real estate, mortgages, pension plans and credit unions. The agency has seven field investigators and is recruiting two more, she added.

"My staff know very well how these businesses work and where there may be risks of misconduct."

Still, she said, adequate funding is an ongoing problem for her agency, and the "recruitment and retention [of staff] in times of restraint" is a particular issue.

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