How to Start a Mortgage Brokerage in Ontario

This guide covers the firm, not the individual. A mortgage brokerage in Ontario is a licensed business that deals and trades in mortgages through licensed individuals. The individual licences — mortgage agent level 1, mortgage agent level 2, and mortgage broker — are covered in the guides linked in the Related guides section, and the principal broker is the bridge between the two: an individual holding a broker licence who is appointed as the firm's chief compliance officer. This guide covers only what the Financial Services Regulatory Authority of Ontario (FSRA) states about the brokerage licence itself: the application, the principal broker, the insurance, the trust account, the suitability checks, and the sponsorship of agents and brokers. It gives no financial advice, no advice on whether opening a brokerage is a sound business decision, and no guidance on mortgage products, rates, or lender selection. Those are business and professional judgments for the applicant and their advisers, and they are outside this guide's scope.

The governing statute is the Mortgage Brokerages, Lenders and Administrators Act, 2006, as amended, administered by FSRA. All individuals and businesses who conduct mortgage brokering activities in Ontario must be licensed with FSRA under that Act. A separate application is required to be licensed as a mortgage administrator; this guide does not cover administration, and a business that intends to administer mortgages as well as broker them must apply separately for that licence.

Step 1: Confirm the principal broker exists before building anything else

A brokerage cannot be licensed without a principal broker, and the principal broker cannot be appointed without already holding a broker licence. Start the plan there, not with premises, branding, or a lender list. Under the Act, each mortgage brokerage must appoint one principal broker, the principal broker's job is to be the chief compliance officer, a brokerage must have a principal broker at all times, and it may have only one at a time.

Qualification is a matter of position as well as licence. The principal broker must be a licensed mortgage broker authorized by the brokerage to deal or trade in mortgages on its behalf, and must additionally be a director or officer if the brokerage is a corporation, a partner if it is a partnership other than a limited partnership, a general partner (or a director or officer of a corporation that is a general partner) if it is a limited partnership, or the owner or sole proprietor if it is a sole proprietorship. A business whose intended principal broker is an employee with no ownership or directorship position in a corporation cannot appoint that person until the position changes. Decide the legal form and the principal broker's position in it together, in the same conversation, because each constrains the other.

The timeline consequence is the longest lead time in the whole project. Becoming a mortgage broker requires at least 24 months licensed as a mortgage agent level 2 over the last 36 months, plus the approved education described in the frequently asked questions section. A person starting from no licence cannot become principal broker of a new brokerage for at least two years. A new brokerage is therefore normally founded by an existing broker, or by a business that recruits an existing broker into the qualifying position. Either way, name the principal broker, confirm the broker licence is current, and confirm the position in the business, before spending on anything that assumes the brokerage will open.

Step 2: Choose the business form and gather the business documents

The licence must be held by a business in one of three accepted types: a corporation, a partnership, or a sole proprietorship (an unincorporated business). The application collects the full legal name in the form the law requires for each type: for a corporation, the name in the articles of incorporation or the latest articles of amendment, amalgamation, or continuance; for a partnership, the name as it appears on the partnership agreement, registered as the firm name with Ontario's Ministry of Government and Consumer Services if different from the full name of the partners, with all partners and the type of partnership listed; for a sole proprietor, the sole proprietor's legal name in Canada, who must be a Canadian resident. Where not all partners in a partnership are individuals, an organizational chart identifying the partners and the type of partnership must be provided; for a limited partnership, identify the general partner and each limited partner, and for corporate partnerships, list the officers or directors for each partner.

Before beginning the application, FSRA requires four things to be in hand. First, the principal broker identified, with contact information including an email address. Second, official documentation for the business, such as articles of incorporation for a corporation, the partnership agreement for a partnership, the Master Business Licence if the business uses a business or trade name, and a list of directors, officers, or partners as applicable. Third, a copy of the business's errors and omissions insurance certificate and policy, as described in Step 3. Fourth, an Ontario mailing address for service or to receive registered mail, which cannot be a post office box. The application also requires a principal place of business in Ontario, where the business will carry out its mortgage brokerage activities or maintain its records, which likewise cannot be a post office box, and an operating telephone number. A brokerage that will have branch offices open to the public in Ontario, other than its principal place of business, must list their addresses and telephone numbers.

The business may use one other name in addition to its legal name, and that name must be registered under Ontario's Business Names Act. A licence cannot be issued to a business using a name confusingly similar to another licensed brokerage or otherwise objectionable on public grounds, and it is an offence for a brokerage to carry on business in a name other than the name in which it is licensed. If the business intends to carry on business using a franchise name, the franchise name must be included in its legal or registered business name, and the business must have authorization from the franchisor to use it. The application also asks whether the business is a finance company — a corporation or partnership, other than a financial institution, whose material business activity involves making or refinancing loans or similar arrangements for advancing funds or credit, and whose shares or ownership interests, or those of an affiliate, are listed on a prescribed stock exchange — and, if so, requires the exchange, the affiliate, and the trading code, plus an organizational chart where the finance company is affiliated with a listed company.

Step 3: Arrange errors and omissions insurance from an approved issuer

Errors and omissions insurance must be in place before the application is submitted, because the application requires a copy of the certificate and policy. The insurance must be in a form approved by FSRA, with extended coverage for loss resulting from fraudulent acts, covering the brokerage and its brokers and agents, from an insurance company on FSRA's list of approved providers. The minimum cover is $500,000 for any one occurrence and $1 million for all occurrences in a given year. The law requires the insurance at all times without exception, whether or not the brokerage is doing business, and FSRA must be notified immediately if the policy is cancelled or not renewed.

Arrange the insurance through the representing insurance brokers for the approved providers, as FSRA directs, and confirm in writing that the policy is in the FSRA-approved form, covers fraudulent acts, covers the brokerage and all of its brokers and agents, and meets the minimum limits. Keep the certificate and the policy together in the application file. Do not rely on any other professional liability policy: FSRA states that the Real Estate Council of Ontario policy does not cover mortgage brokering and that insurance-broker or insurance-agent coverage does not cover it either. The premium figure is not stated in this guide, because no premium figure was verified on an FSRA page ; obtain the premium from the approved provider's representing broker and budget it as a quoted figure, not as an estimate carried from another source.

Step 4: Submit the brokerage licence application through the Online Services Portal

The Mortgage Brokerage Licence Application is submitted through FSRA's Online Services Portal. FSRA states that an incomplete or unclear submission may result in processing delays or rejection, and that once the application is completed and submitted, the applicant receives an email confirming receipt, after which FSRA advises whether the application can proceed to the next step. The application has eight steps: attestation, consent, and notification; applicant information; business information; suitability for a licence; directors, officers, and partners; business operations; submit the application form; and upload all required documents and submit the application online. All steps must be completed; Step 5 does not apply to sole proprietorships.

Step 1 is signed by a director, officer, or partner, or by the sole proprietor, who declares that the statements, declarations, and answers provided, including attachments, are true and complete. A false, deceptive, or misleading statement or omission may result in refusal or revocation of the licence, prosecution, or other sanctions, and providing false, deceptive, or misleading information to the Chief Executive Officer or a designate is an offence under section 45 of the Act. The signer consents on the applicant's behalf to the collection and validation of the information and to sharing it with other licensing authorities, regulatory bodies, or law enforcement agencies for law-enforcement purposes. Read every declaration before signing it, and do not sign on the basis that a detail can be corrected later: the attestation is the application's foundation.

Step 2 collects the applicant information that will appear in FSRA's registry, some of which FSRA may share with the public: the business type and legal name, registration and jurisdiction information for corporations and partnerships, the registered business or trade name, franchise participation, the proposed principal broker's name and email address, and the primary licensing system user. The principal broker and the primary licensing system user may be the same individual or different individuals. The primary licensing system user is responsible for controlling access to and use of the brokerage's licensing system, for password protection, for approving all data entered by them or by other administrative users, and for notifying FSRA promptly by email if unauthorized access is discovered; FSRA will discontinue access until security is re-established. The first application the brokerage submits through the licensing system is the broker application for its principal broker.

Step 3, business information, requires the brokerage to confirm awareness of the standards of practice and reporting requirements, to declare it will only accept or conduct business with its licensed brokers and agents or individuals representing licensed or exempt brokerages, to confirm its errors and omissions insurance, to state whether it handles or intends to handle trust funds, to designate a person to receive complaints, and to disclose any other business conducted from the premises, any other licences held, and whether it intends to operate a mortgage investment corporation in the year of the application. Step 6, business operations, requires the first-year business plan — the type of mortgages the brokerage plans to engage in, the number of mortgages it expects to close, and the number of agents, brokers, and other staff it intends to hire — the funding sources for mortgages, the business operation policies and procedures including supervision processes, internal controls, business model, and conflicts-of-interest policies, and confirmation that the applicant has read and understood the Mortgage Broker Regulators' Council of Canada Code of Conduct for the Mortgage Brokering Sector. Prepare the business plan and the policies before starting the application, because the form asks for them in substance, not as attachments to be written later.

Step 5: Complete the suitability checks and declarations

FSRA assesses suitability for a licence from all relevant information, including criminal records, current charges and convictions under any legislation or by any regulatory body, other registrations or licences, and bankruptcies. Step 4 of the application requires details of any licence or registration refused, revoked, suspended, or cancelled under the Act or another regulatory regime, or any disciplinary proceeding resulting in a penalty; any bankruptcy, voluntary assignment, proposal, or current bankruptcy or insolvency proceeding, with the amounts owing, creditors, and status; any outstanding judgments, with amounts, creditors, and repayment arrangements; any guilty plea or finding of guilt, or current charges, for the business, a subsidiary, or a related business; any successful lawsuit or regulatory complaint in the last five years based on fraud, theft, deceit, misrepresentation, forgery, or similar conduct, or on professional negligence or misconduct; and any business relationship terminated in the last five years for breach of confidentiality, breach of trust, fraud, misappropriation of funds, theft, forgery, or similar actions. Attach the supporting documents the form requires, such as a certified copy of a discharge of bankruptcy. Disclose fully and precisely: suitability is assessed on the whole record, and an omission discovered later is worse than a disclosed difficulty explained at the time.

Every individual must also complete a criminal record and judicial matters check (CRJMC) through FSRA's approved vendor, Triton Canada, using FSRA's link to Triton's website. All individuals, including the principal broker and the directors, officers, or partners (or the sole proprietor), must first complete their CRJMCs and provide the Triton confirmation number with their declarations confirming their suitability for licensing the brokerage. A fee of $19.15 applies for Triton's service, and the CRJMC is valid for 90 days, so time the checks to the application's progress: a check completed too early can expire before the declarations are reviewed. The brokerage licence will only be approved or issued when all CRJMCs are completed and the declarations from the directors, officers, or partners are received and reviewed by FSRA. Once approved, an email is sent to the principal broker providing the brokerage's licence number; no paper licence is issued. FSRA is required to maintain a public registry of licensed mortgage brokerages, and licensing information, including the licence number, licence status, legal business address, and the names of directors, officers, partners, or the sole proprietor, may be shared with other organizations as reasonably necessary for detecting, suppressing, and preventing fraud and for other law-enforcement purposes.

Step 6: Set up the trust account, complaints, and supervision systems before dealing

A brokerage that receives or handles money in trust must have a trust account, designated as a mortgage brokerage trust account, at a bank, credit union, or loan and trust company, and all funds held in trust must be maintained separately from operating funds. Any money received by a brokerage, directly or indirectly, from a borrower, lender, or investor is deemed to be trust funds, except money clearly earned for services completed or expenses actually incurred. A brokerage must have only one trust account unless FSRA has approved additional accounts, requested in writing. Brokerages that receive trust funds must conduct monthly trust account reconciliations; brokerages that have received no trust funds in the fiscal year must provide a declaration to that effect annually. The principal broker signs and approves trust account reconciliation statements to confirm they are accurate. The application requires the business to state whether it handles or intends to handle trust funds and to confirm awareness of the trust-account requirements. Open the trust account, set the monthly reconciliation routine, and name the person who prepares and the principal broker who approves each reconciliation, before the first client dollar arrives.

The brokerage must also designate a person to receive complaints and respond in writing to all written complaints it receives, with the designated person's name, email address, and contact information stated in the application. The supervision system is the principal broker's core duty: ensuring the brokerage and each broker and agent follow the Act, taking reasonable steps to deal with anyone working for the brokerage who does not follow it, and reviewing policies and procedures to ensure compliance and adequate supervision. Write the supervision routine down — who reviews what, how often, and what record is kept — before the first agent is sponsored, because the principal broker is responsible for taking reasonable steps to ensure each agent is authorized to deal or trade on the brokerage's behalf and is complying with every requirement under the Act, and a brokerage that does not take reasonable steps to deal with contraventions may face enforcement action against the principal broker.

Step 7: Sponsor agents and brokers under the firm licence, and pay their fees

Once the brokerage licence is approved, the brokerage prepares and submits applications to license its other brokers and agents through FSRA's online licensing system. Every individual who will deal or trade in mortgages on the brokerage's behalf must hold a broker or agent licence naming this brokerage, and the brokerage pays the licence fees on behalf of each of its agents and brokers, other than the principal broker, electronically when submitting their applications. The brokerage licence fee covers both the brokerage and the principal broker, and the annual regulatory fee, due every March 31, is paid by the brokerage on behalf of its agents and brokers other than the principal broker when they renew. Individual agent and broker licences expire annually and must be renewed before March 31, with continuing education required in even years; the principal broker is responsible for initiating and renewing each agent's and broker's licence before the deadline. Build the renewal calendar at licensing time: the March 31 deadline, the February opening of renewals, and the continuing-education cycle are the firm's recurring compliance dates, and missing them suspends the individuals and, where no other broker can serve as principal broker, the brokerage licence itself.

Recruitment must follow the licensing rule, not precede it. An agent licensed under another brokerage must transfer through Licensing Link, initiated by the new brokerage's principal broker, and must not deal for the new brokerage until licensed under it. There are no fees for transferring a licence. A new agent must complete the approved education, be sponsored by the brokerage, and be licensed before dealing. Keep a licence register for the firm: each individual's licence class, expiry date, continuing-education status, and sponsoring brokerage, checked monthly by the principal broker. The register is the control that prevents the most common firm-level error — an individual dealing under a licence that names another brokerage, or under a licence that expired on March 31.

Figures cut from this guide

This guide states no errors and omissions insurance premium figure, because no premium was verified on an FSRA page ; obtain it as a quotation from an approved provider's representing broker. It states no processing timeline for the brokerage licence application, because no timeline was verified on an FSRA page ; FSRA states only that an incomplete or unclear submission may cause delays or rejection, and that it advises whether the application can proceed after submission. It states no course fee for the mortgage agent or broker education programs, because no course fee was verified on an FSRA page. It states no annual regulatory fee amount for the brokerage, because the regulator's pages state the fee is due annually on March 31 and refer the reader to the Fee Rule without stating the brokerage amount on the page. Confirm every fee, premium, and timeline on FSRA's Fee Rule and licensing pages before budgeting or promising an opening date.

Related guides:

• How to Become a Mortgage Agent in Ontario — the individual entry licence: eligibility, course provider, getting hired by a brokerage, and the first year as a level 1 agent.
• How to Get a Mortgage Broker Licence in Ontario — the individual broker licence: the level 1 and level 2 ladder, the broker upgrade, FSRA fees, and continuing education.
• How to Register a Business in Ontario — the Ontario business-name and business registration steps that sit underneath the FSRA brokerage application.

Sources

• Financial Services Regulatory Authority of Ontario, "Apply for a new mortgage brokerage licence" — the eight-step application, business types and legal names, required documents, Ontario addresses, trust account rules, suitability disclosures, business operations and business plan, CRJMC fee of $19.15 and 90-day validity, prorated fee collection, and the annual regulatory fee due March 31.
• Financial Services Regulatory Authority of Ontario, "Become a Principal Broker" — one principal broker at all times, chief compliance officer role, qualification by business form, duties under Ontario Regulation 410/07, annual renewal before March 31, suspension where no other broker can serve, and the Triton CRJMC route.
• Financial Services Regulatory Authority of Ontario, "About mortgage brokerage and mortgage administrator licences" — licensing under the Mortgage Brokerages, Lenders and Administrators Act, 2006, continuous brokerage licences with an annual regulatory fee, the fee covering the brokerage and the principal broker, and errors and omissions insurance minimums of $500,000 per occurrence and $1 million per year with approved providers.
• Financial Services Regulatory Authority of Ontario, "Become a mortgage broker" — upgrading a mortgage agent level 2 licence held for at least 24 months over the last 36 months, approved education including the Private Mortgages Course, no upgrade fee for an active level 2 licence, and initiation through Licensing Link with a Triton criminal record check.
• Financial Services Regulatory Authority of Ontario, "Fee Rule — Consolidated" (Rule 2022-001, Assessments and Fees) — the mortgage brokerage licence application fee formula of $100 plus A times $883 divided by 12.

Figures that could not be verified on an FSRA page were cut from this guide: errors and omissions insurance premiums; the brokerage licence application processing timeline; mortgage agent and broker course fees; and the annual regulatory fee amount for the brokerage. Check FSRA's Fee Rule and licensing pages for current figures before budgeting or promising an opening date.