B.C. Mortgage Services Act: Impact on Lenders Remains Unclear

British Columbia’s new Mortgage Services Act (MSA) is set to replace the Mortgage Brokers Act (MBA) on October 13, 2026. The Mortgage Services Rules (Rules) and Mortgage Services Regulation (Regulation) accompanying the new legislation were finalized on July 14, 2025, but the impact of this framework on mortgage lenders — particularly non-Canadian institutional mortgage lenders — remains unclear.

Overview of the Mortgage Services Act

The MSA was developed in response to concerns of money laundering in B.C. that arose after two government reports on money laundering pointed to the MBA as a vulnerability within B.C.’s broader anti-money laundering strategy. Rather than amend the statute, the B.C. government chose to transform the mortgage services regulatory landscape by developing and passing the MSA.

The MSA makes significant changes to B.C.’s mortgage industry, including:

• Centralized Oversight. The MSA establishes the B.C. Financial Services Authority (BCFSA) as the principal regulator of the mortgage services industry. The BCFSA has the power to set licensing and educational requirements, enforce compliance and set new rules. The MSA also establishes the position of Superintendent of Mortgage Services (Superintendent), who can issue and withhold licenses, direct investigations into individuals providing mortgage services, compel the disclosure of certain records and information, and impose administrative penalties on individuals who contravene the MSA.
• Licensing Framework. Unlike the MBA, under the MSA, parties providing mortgage services — including those dealing in, trading in, administering and lending mortgages — will be required to obtain and maintain the licence category relevant to their services.
• Education Requirements. As part of the licensing process, current registrants must complete transition courses relevant to the services they wish to provide under the MSA. The BCFSA will release further information on these courses on a rolling basis over the coming months. A new licensing course for individuals who are not registered when the MSA comes into force is expected to launch in the summer of 2026.
• Enforcement. Under the MSA, the Superintendent is granted considerable authority to enforce the requirements of the act. Where a person is found to be providing mortgage services without a licence, the Superintendent may order them to cease the impugned conduct, take actions to remedy the situation, pay the expenses incurred by the BCFSA in investigating the matter, or pay a penalty of up to C$250,000 for individuals and up to C$500,000 for non-individuals.

Finalized Rules and Regulation

The MSA’s extensive Rules clarify the operational requirements of parties engaged in the mortgage services industry. The Regulation supplements the MSA with important details regarding exemptions, fees, qualifications and similar matters.

Key features of the Regulation include:

• Exemptions from Licensing Requirements. The Regulation exempts certain industry participants from requirements related to licensing (these exemptions are described in more detail below).
• Fees and Expenses. The Regulation introduces a new fee schedule (effective on October 13, 2026), which increases the application and licensing fees payable by mortgage service providers. The fees payable by mortgage lenders are not discussed.
• Personal Mortgage Corporations (PMC). Under the Regulation, licensed principal brokers and mortgage brokers may apply to have a company licensed as a PMC that has income and tax benefits.

Key features of the Rules include:

• Qualification Requirements. The Rules expand previous qualification requirements and add new ones, such as English proficiency standards for all licensees, requalification requirements for licensees seeking reinstatement, experience requirements for principal brokers, and financial and governance policy requirements for mortgage brokerages.
• Standards and Duties. The Rules describe the conduct requirements of licensees, including communication standards, conduct and events requiring that the Superintendent be notified, the responsibilities of licensees based on their licence level and categories, and similar matters. Importantly, licensees are required to take reasonable care in verifying the identity of the parties involved in mortgage transactions, with corresponding reporting obligations where fraud or illegality is suspected.
• Administrative Penalties. As mentioned above, the Superintendent has authority regarding compliance and enforcement under the MSA. The Rules categorize contraventions of the MSA (Categories A–F), allowing the Superintendent to impose administrative penalties ranging from C$1,000 to C$100,000, depending on the category.

No Exemption for Non-Canadian Institutional Lenders?

In our 2024 bulletin on the MSA, we highlighted the uncertainty surrounding non-Canadian institutional mortgage lenders and whether they will be exempt from the MSA’s licensing requirements. The Rules do not yet establish any exemptions for non-Canadian institutional lenders, and they do little to clarify how mortgage lenders will be impacted by the new licensing requirements.

Exemptions Under the Act

Section 4 of the MSA exempts certain entities, including savings institutions, from its licensing requirements. But as currently formulated, this exemption may not extend to non-Canadian institutional lenders. The MSA’s savings institution exemption applies only to banks formed or incorporated under the federal Bank Act. It is unclear whether only the subsidiary of a foreign bank regulated under the Bank Act will be exempt from the MSA’s licensing requirements or whether the exemption will extend to the foreign bank itself.

Exemptions Under the Regulation

Part 2 of the Regulation provides certain licensing exemptions for entities regulated by other federal and provincial statutes (none of which applies to non-Canadian institutional lenders). These entities include:

• Certain investment dealers registered under, and in compliance with, the Securities Act (B.C.)
• Certain real estate licensees under the Real Estate Services Act (B.C.)
• Certain reporting agencies under the Business Practices and Consumer Protection Act (B.C.)
• Certain notaries public in good standing with the Society of Notaries Public of British Columbia
• Certain accounting professionals under the Chartered Professional Accountants Act (B.C.)
• Certain federally regulated entities, including a federal cooperative credit society or federal retail association, under the Cooperative Credit Associations Act (Canada) or the Retail Association Regulations (Canada)
• Certain directors, officers and employees under the Business Corporations Act (B.C.)
• Certain individuals making referrals under the MSA when providing the mortgage service of dealing in mortgages when they are referring a prospective borrower to a prospective lender

Division 2 of the Regulation introduces two additional licensing exemptions specific to mortgage lenders (neither of which is available to non-Canadian institutional lenders). The first exemption is available to individuals lending their own money (or their spouse’s money) on behalf of themselves (or their spouse) who, in doing so, are not carrying on the business of providing the mortgage service of mortgage lending. The second exemption is similar and applies to principal brokers and mortgage brokers providing lending services in their personal capacity. Non-Canadian institutional lenders cannot benefit from these exemptions because, among other reasons, the lending services they seek to provide are in the course of their business dealings.

Conclusion

The B.C. government and BCFSA have indicated that additional information on the MSA and its impact on mortgage lenders will be released over the coming months. But as the MSA framework currently stands, there remains considerable uncertainty surrounding how non-Canadian institutional lenders will be impacted. We will continue to provide updates on this issue with further bulletins.

For more information, please contact Greg Umbach, Rena Taggar or any other member of the Commercial Real Estate group.