Commissioner’s Decision: FirstLine Mortgages (a division of CIBC Mortgages Inc.)
Nature of violation
Cost of Borrowing – Failure to disclose the nature and amount of a non-interest fee
Trust and Loan Companies Act, s. 438(1)(e)
Cost of Borrowing (Trust and Loan Companies) Regulations, s. 8(1)(q)
Section 8(1)(q) of the Cost of Borrowing (Trust and Loan Companies) Regulations states that a company that enters into a credit agreement for a loan for a fixed interest rate for a fixed amount, to be repaid on a fixed future date or by instalment payments, must provide the borrower with an initial disclosure statement that includes the nature and amount of any non-interest charges.
FirstLine Mortgages did not fully disclose in writing the nature and amount of the non-interest fee for changing the frequency of mortgage payments. Instead, the initial disclosure statement consumers received referred only to the existence of a fee for this service. The consumer was only made aware of the amount of the fee at the time the service was requested.
Administrative monetary penalty
An Administrative Monetary Penalty of $50,000 was imposed against CIBC Mortgages Inc. for not clearly disclosing the amount of the fee to be charged as required by the Regulations.
Corrective measures taken by financial institution
All FirstLine Mortgage customers were provided with a fee schedule.
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