The wheel’s still in spin: An update to the BC Mortgage Services Act

This insight was prepared with the assistance of Articled Student Melissa Creech.

As mentioned in a January 2025 insight, the passage of British Columbia’s incoming Mortgage Services Act, S.B.C. 2022, c.27 (MSA) would bring sweeping changes to the regulation of mortgage services in the province. Since then, the framework has moved from proposal to near-reality. The BC government approved the MSA Rules, B.C. Reg. 110/2025 (Rules) and Regulation, B.C. Reg. 351/2025 (Regulation) on July 14, 2025, starting a 15-month transition period, and the MSA is now confirmed to come into force on October 13, 2026, repealing the Mortgage Brokers Act (MBA). For lenders – particularly private, non-bank and non-Canadian lenders active in the BC mortgage market – the last several months have brought welcome clarity on some fronts and continued uncertainty on others.

What’s confirmed

Several elements of the new regime that were still in draft from when we last wrote are now settled law and policy:

• Licensing categories are finalized. The MSA replaced the single “mortgage broker” registration with four distinct categories; these include “dealing in mortgages,” “trading in mortgages,” “administering mortgages” and “mortgage lending.” Each category has its own scope of regulated activity.
• Penalties are set. Administrative penalties of up to $100,000 per contravention (tiered across categories), disciplinary penalties of up to $500,000 ($2.5 million for repeat offenders) and penalties of $250,000 for individuals and $500,000 for non-individuals who provide mortgage services without a licence are now part of sections 116–117 of the Rules and sections 58 & 67 of the MSA.
• A hard education deadline applies to existing registrants. Current MBA registrants must complete BC Financial Services Authority’s (BCFSA) mandatory transition education by September 22, 2026, or their registration will not carry over to a licence when the MSA takes effect. This has knock-on effects for any brokerage or lender counterparty relying on that registrant’s authority to act.
• The failure to complete education can prevent the registration of everyone else registered under the same brokerage from carrying over as well, particularly where the non-compliant individual is the Principal Broker as defined in the MSA.
• Anti-Money Laundering obligations are more concrete. Licensees will be required to take reasonable care in verifying the identity of parties to a mortgage transaction and to report suspected fraud or illegality.
• A fee schedule and exemption list are in place. Part 3 the Regulation sets out application and licensing fees effective October 13, 2026, and confirms categories of exempt persons (including insurance companies, savings institutions, government bodies, lawyers acting incidentally and certain court-appointed or estate fiduciaries).

Important for lenders

Only the dealing in mortgages, trading in mortgages and administering mortgages categories will be in force on October 13, 2026. The mortgage lending licence, the category that will most directly capture lenders, has no announced in-force date. BCFSA has said it will share information on the mortgage lending licence, including implementation timelines, once it is available from the Provincial Government.

This is a meaningful distinction for lenders to keep in mind. Even after October 13, 2026, a lender itself may not yet require a mortgage lending licence, but every broker, brokerage and mortgage administrator it deals with will need to be validly licensed under the new regime to continue acting. Lenders should not assume that because their own licensing obligation is deferred, that they are not affected by the transition on October 13, 2026.

Any entity dealing in mortgages, trading in mortgages or administering mortgages left unlicensed on October 13, 2026, is legally barred from providing mortgage services. A brokerage or lender counterparty relying on that entity’s authority to act – at mid-file, at closing or otherwise – is exposed to a transaction proceeding through an entity who can no longer lawfully act.

Additionally, the phased-out rollout creates a practical gap in that the Rules, section 36, requires Licensees not to provide mortgage services to or on behalf of a lender unless that lender is licenced or otherwise authorized, but because the mortgage lender licence category won’t be implemented until the second phase, no lenders will actually hold that licence when the MSA first comes into force. Licensees will be subject to a verification obligation that they have no practical way to satisfy and the BCFSA has not yet clarified how this gap will be addressed.

What’s still unresolved for the business side

With this rollout there seems to be a consistent gap in that the Rules and Regulation released to date do relatively little to address how private, non-bank lenders and non-Canadian lenders specifically will be treated once the mortgage lending licence category is implemented. Points still to be sorted out include:

• Whether, and on what basis, non-Canadian institutional lenders will be exempted from licensing or will instead face a registration process similar to that contemplated for mortgage brokers under the Real Estate Services Act model that the MSA is said to follow
• What qualification, capital, governance and experience requirements (if any) will apply to entities seeking a mortgage lending licence, none of which have been published to date.
• How syndicated, warehoused or securitized lending arrangements involving multiple funding parties will be characterized under the new “mortgage lending” and “trading in mortgages” definitions.
• Whether an implementation and transition period comparable to the current 15-month runway will be provided once the mortgage lender licence category is finally scheduled, or whether lenders will face a shorter compliance window.

What lenders should be doing now

• Confirm that mortgage brokers, brokerages and administrators used in BC transactions are on track to complete transition education and hold a valid MSA licence by October 13, 2026. There is a risk an unlicensed counterparty could put deals and servicing arrangements on hold.
• Review identity-verification and fraud-reporting practices against the MSA’s AML expectations, since these obligations flow through licensees a lender relies on even before the lender licence category is in force.
• Watch BCFSA’s published guidance and rule amendments for the mortgage lender licence category, since the in-force date and requirements for that category will be announced with limited lead time once finalized.
• Engage counsel early on structuring considerations for non-Canadian or institutional lending vehicles, given the continuing uncertainty around how those structures will be treated.

How we can help

The transition to the MSA is well underway, but key questions for the lending side of the industry remain open. MLT Aikins is continuing to monitor BCFSA’s rule-making and guidance as the October 13, 2026, in-force date approaches. For assistance assessing how the MSA will affect your BC mortgage lending activity, please contact our Banking and Commercial Lending team in Vancouver.

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