Private mortgage lending in Canada operates under a dual system of federal and provincial regulation. While certain federal statutes, such as the Criminal Code (interest rate limits) and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, apply nationwide, day-to-day regulation of mortgage brokering, administration and private lending falls primarily within provincial jurisdiction. For anyone involved in this sector, whether as a lender, broker, administrator or advisor, compliance with these regulatory requirements is a statutory obligation and a key element of risk management.
Note: A casual, one-off private mortgage from an individual’s own savings is generally not considered “engaged in the business” and therefore falls outside the scope of a FINTRAC reporting entity, provided they do not otherwise trigger the definition (e.g. they are not also a licensed broker or administrator).
Provincial Licensing and Oversight
The mortgage brokering and private lending industry is primarily regulated at the provincial level. Each province and territory has its own enabling legislation and regulatory body that governs licensing, professional standards, and consumer protection.
In most provinces, individuals or corporations that carry on the business of dealing in mortgages must be licensed. This includes mortgage brokerages, agents and mortgage administrators. The purpose is to ensure minimum standards of competence, ethical conduct, and accountability and to protect the public from predatory or deceptive practices.
The Lender/Investor Exemption:
An important carve-out exists for private lenders using their own capital. In several provinces, a person or corporation that lends its own money and does not act on behalf of others is exempt from the requirement to hold a brokerage license.
However, this exemption is narrowly construed and comes with significant conditions. The lender must not represent themselves as being “in the business” of brokering or administering mortgages for others. Marketing or holding out services as a “mortgage brokerage” or “mortgage administrator” may nullify the exemption.
Regulators may assess the scale and frequency of lending. Habitual or large-scale lending, even with one’s own funds, may be treated as carrying on the business of mortgage brokering, potentially triggering licensing requirements.
Provincial Regulators
- Ontario: Financial Services Regulatory Authority of Ontario (FSRA)
- British Columbia: BC Financial Services Authority (BCFSA)
- Alberta: the Real Estate Council of Alberta (RECA)
- Manitoba: the Manitoba Securities Commission (MSC)
- Nova Scotia: Service Nova Scotia, under the authority of the Mortgage Regulation Act. In
- Saskatchewan: Financial and Consumer Affairs Authority of Saskatchewan (FCAA)
- Newfoundland and Labrador: Government Modernization and Service Delivery