REGARDING the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, in particular sections 2 and 35;
AND REGARDING Darcy Schanck
Interim Compliance Order to Cease and Desist Unlicensed Activity
TO: Darcy Schanck
Subsections 35(1) and (2) of the Mortgage Brokerages, Lenders and Administrators Act, 2006 (the “Act”) provide that if the Superintendent of Financial Services (the “Superintendent”) is of the opinion that a person or entity is committing or has committed any act or is pursuing or has pursued any course of conduct that contravenes or does not comply with a requirement established under the Act or that might reasonably be expected to result in a state of affairs that would contravene or not comply with a requirement established under the Act, the Superintendent may order a person or entity to cease committing an act or cease pursuing a course of conduct identified by the Superintendent or to perform such acts as, in the Superintendent’s opinion, are necessary to remedy the situation.
Subsection 35(3) of the Act provides that where the Superintendent proposes to make a compliance order, the Superintendent shall give written notice of the proposal to the licensee, including the reasons for the proposal and to follow the other steps in section 35, including the holding of a hearing before the Financial Services Tribunal (the “Tribunal”) if requested.
Subsection 35(7) of the Act provides that, if in the Superintendent’s opinion, the interests of the public may be adversely affected by any delay in making an order as a result of the steps required by section 35, the Superintendent may, without notice, make an interim order and may do so before or after giving the notice required by subsection 35(3).
Darcy Schanck (“Mr. Schanck”) is not licensed as a mortgage agent. Mr. Schanck was refused a mortgage agent licence by order of the Superintendent dated July 21, 2016. However, Mr. Schanck has carried on the business of dealing in mortgages by providing information about a prospective borrower to a prospective mortgage lender and/or negotiating a mortgage on behalf of another person or entity or by holding himself out as doing so.
The Superintendent has issued a Notice of Proposal to make a permanent compliance order against Mr. Schanck (the “NOP”). For the reasons outlined in the NOP and for the reasons set out below, the Superintendent is of the opinion that the interests of the public may be adversely affected by any delay in the making of a permanent compliance order. Accordingly, the criterion for the issuance of an interim suspension order under section 35 has been met.
The unlicensed activities of Mr. Schanck include:
- providing information about a prospective borrower to a prospective lender;
- assessing prospective borrowers on behalf of prospective lenders; and/or
- negotiating or arranging a mortgage on behalf of another person or entity.
Mr. Schanck advertises himself and his operation, Darcy Schanck Financial as a “mortgage broker for borrowers who want to secure financing” and who can help those looking to find or gain approval for a mortgage loan. Mr. Schanck has also reached out to a consumer offering his services to negotiate a refinance of a rental property on the consumer’s behalf.
Mr. Schanck has recently been refused a mortgage agent licence on the basis that he was not suitable to be licensed. Mr. Schanck’s criminal history led the Superintendent to conclude that Mr. Schanck was unsuitable. In spite of an order refusing Mr. Schanck a licence, he has been dealing in mortgages in the manner described above.
For the reasons contained in the NOP and for the above reasons, the Superintendent is of the opinion that the interests of the public may be adversely affected by any delay in making a permanent compliance order against Mr. Schanck. Accordingly, the criterion in section 35 of the Act for the issuance of an interim compliance order against Mr. Schanck has been met.
Interim Compliance Order to Cease and Desist Unlicensed Activity
IT IS ORDERED THAT that pursuant to sections 2 and 35 of the Act, and for the reasons described above, Darcy Schanck.:
- Immediately cease soliciting persons or entities to borrow or lend money on the security of real property in Ontario, or holding itself out as doing so;
- Immediately cease providing information about a prospective borrower to a prospective mortgage lender or holding itself out as doing so, in respect of real property in Ontario;
- Immediately cease negotiating or arranging a mortgage in respect of real property in Ontario on behalf of another person or entity, or attempting or holding itself out as doing so;
- Immediately cease accepting any fees or funds in connection with the solicitation, negotiation, or arrangement of a mortgage in respect of real property in Ontario;
- Immediately cease using a description that might reasonably be expected to lead to the belief that it is a licensed mortgage agent in Ontario; and
- Immediately cease advertising as a mortgage agent in Ontario.
TAKE NOTICE THAT this Interim Order takes effect immediately and will remain in effect until the expiry of the period for requesting a hearing in respect of the Superintendent’s Notice of Proposal as detailed in that Notice of Proposal (15 days after the Notice of Proposal is given, or deemed to have been delivered).
AND TAKE NOTICE THAT pursuant to subsections 48(4) and 49(1) and (2) of the Act, every person who fails to comply with an order made under this Act is guilty of an offence and every individual convicted of an offence under the Act is liable to a fine of not more than $100,000.00 or imprisonment for a term of not more than a year or both a fine and imprisonment. Every corporation convicted of an offence under the Act is liable to a fine of not more than $200,000.00.
Pursuant to subsection 48(5) of the Act, every director or officer of a corporation that commits an offence under this Act who directed, authorized, assented to, acquiesced in or participated in the commission of the offence, or who failed to take reasonable care to prevent the corporation from committing the offence, is guilty of an offence, whether or not the corporation is prosecuted or convicted.
Subsection 48(6) of the Act provides that every partner of a partnership and every individual who is a member of the directing body of an entity, other than a person or partnership, who directed, authorized, assented to, acquiesced in or participated in the commission of an act or omission by the partnership or entity which, if committed by a person, would be an offence under the Act, is guilty of an offence.
Si vous désirez recevoir cet ordre en français, veuillez envoyer votre demande immédiatement à: Adjointe, audiences, Greffe, Commission des services financiers de l’Ontario, 5160 rue Yonge, 14em, Toronto ON M2N 6L9.
DATED at Toronto, January 9, 2017.
original signed by “Brian Mills”
Superintendent of Financial Services
Financial Services Commission of Ontario