BC Unveils Mortgage Reforms to Fight Fraud — But Critics Say It's Too Late

(Image courtesy of CBC)

The BC government has approved new rules for the province’s mortgage industry aimed at cracking down on fraud and money laundering. Still, critics argue that the measures arrive late and fall short of fully implementing key anti-money laundering recommendations made over three years ago.

The new Mortgage Services Act (MSA), which will replace the outdated Mortgage Brokers Act in October 2026, brings sweeping regulatory changes to a sector the Cullen Commission identified as a money laundering risk in 2022. The government is touting the move as a modern, consumer-focused overhaul of a 50-year-old regime.

But with a 15-month transition period and multiple Cullen Commission recommendations still pending, the announcement is prompting renewed scrutiny of the province’s slow progress on promised reforms.

“The mortgage market has changed dramatically in the 50 years since the Mortgage Brokers Act was passed,” said Tolga Yalkin, CEO of the BC Financial Services Authority (BCFSA), the regulator overseeing the transition. “It is larger, more complex, and operates at a much faster pace.”

The MSA will raise licensing standards for brokers, introduce stronger disclosure and suitability requirements, and give the regulator greater enforcement tools, including the ability to impose stiffer penalties — up to $500,000 for individuals and $2.5 million for repeat corporate offenders.

However, these changes won’t come into force until October 13, 2026 — a full four years after Justice Austin Cullen recommended them.

Partial progress on Cullen’s roadmap

The new act does respond to Cullen’s call for modernized oversight. It introduces four new licensing categories (dealing, trading, administering, and lending mortgages), tighter anti-money-laundering compliance obligations, and clearer obligations for brokers to identify borrowers, flag conflicts, and avoid unlawful deals.

But it also highlights how far the province has yet to go. Other key Cullen recommendations — including a special investigation unit and an independent money laundering commissioner — remain unimplemented. The government has provided no timeline or commitment for those initiatives.

Meanwhile, other legislative efforts spurred by Cullen — such as unexplained wealth orders and beneficial land ownership registries — have moved forward, but experts warn that without strong enforcement and industry-wide cultural change, they may have limited reach.

Industry supportive, but uncertainty remains

Mortgage industry groups are broadly backing the changes.

“We, as an industry, are in strong support of enhancing consumer protection and combating fraud in the real-estate sector,” said Lauren van den Berg, president and CEO of Mortgage Professionals Canada.

Despite public endorsements, the coming year will test the readiness of thousands of brokers and sub-brokers, many of whom will need to retrain and restructure to meet new standards. The rules also bring new responsibilities to identify and avoid illegal lending schemes — a challenge given the opacity that has long characterized BC's real estate market.

As for consumers, the government says homebuyers can look forward to safer, more transparent mortgage advice. Still, until the new rules take effect in late 2026, the province will continue to rely on the same outdated act that Justice Cullen described as inadequate.

Finance Minister Brenda Bailey said the new framework “raises standards across the mortgage industry” and “helps protect both homebuyers and lenders.” But critics argue that with enforcement timelines stretched and key oversight mechanisms still missing, BC's fight against financial crime remains a work in progress.