The LDPSF: Legislative Foundation of Mortgage Brokerage in Quebec
The Act respecting the distribution of financial products and services (LDPSF) is the Quebec framework legislation governing the practice of mortgage brokerage in the province. Adopted in 1998 and amended several times to adapt to the evolution of the financial market, it establishes the rules of certification, professional conduct and supervision applicable to mortgage brokers and their firms. Every mortgage broker practising in Quebec must know this law in depth, as non-compliance can result in severe AMF sanctions up to and including revocation of the brokerage certificate. The LDPSF constitutes the foundation upon which the entire Quebec mortgage brokerage regulatory framework rests.
Fundamental Principles and Obligations of the LDPSF
- Mandatory AMF certification: no one may practise mortgage brokerage in Quebec without holding a valid certificate issued by the Autorite des marches financiers
- Mandatory affiliation with an authorized brokerage firm: the individual broker must be affiliated with a firm that itself holds an AMF licence
- Duty to act in the client's best interest: fundamental obligation to prioritize the client's interests above the broker's personal or financial interests
- Competency obligation and continuing education: maintaining knowledge through completion of continuing education units during each reference period
- Mandatory disclosure of conflicts of interest and compensation: complete transparency about the source and nature of the broker's compensation
- Compliant file keeping: complete and rigorous documentation of each client file, retained for the period prescribed by regulation
- Adequate trust account management: compliance with strict accounting rules and segregation of funds held for clients
The Code of Ethics for Mortgage Brokerage Representatives
The Code of Ethics for mortgage brokerage representatives, adopted under the LDPSF by the Quebec government, specifies and détails brokers' professional obligations. This code is a regulation having force of law that imposes four fundamental obligations: honesty in all communications with clients, lenders and other stakeholders; loyalty to the client, meaning the broker cannot favour their own interests to the detriment of the client's; competence in service delivery, requiring up-to-date knowledge of products and regulations; and diligence in file handling, including rigorous follow-up and responses within reasonable timeframes.
Continuing Education and Certification Maintenance
The LDPSF requires mortgage brokers to complete continuing education units (CEUs) during each two-year reference period. This requirement aims to ensure brokers maintain and update their professional competencies in a constantly evolving field. Continuing education covers regulatory updates (LDPSF amendments, AMF regulations, OSFI guidelines), new mortgage market practices, professional ethics, new financial products and relevant technological developments. Failure to comply with this obligation results in automatic suspension of the brokerage certificate until the required units are completed.
Brokerage Firm Responsibilities
The LDPSF also imposes specific obligations on mortgage brokerage firms. The firm is responsible for supervising its brokers, ensuring compliance of their practices, managing trust accounts and maintaining files. The firm's responsible officer must ensure all affiliated brokers comply with the LDPSF and Code of Ethics. The firm must hold its own AMF licence and maintain adequate professional liability insurance. In case of breach by an affiliated broker, the firm may be held jointly liable.
LDPSF Evolution and Perspectives
The LDPSF undergoes periodic amendments to adapt to the evolution of the financial market and new technological realities. Recent amendments have notably strengthened conflict of interest disclosure obligations, increased continuing education requirements, introduced provisions on the use of technology in financial product distribution and clarified firm responsibilities. The mortgage broker must closely follow these legislative developments to ensure their practice remains compliant. Professional associations, AMF bulletins and continuing education programs are the main sources of information on LDPSF changes.
The LDPSF's comprehensive framework for mortgage brokerage regulation has been instrumental in professionalizing the Quebec mortgage industry and establishing the high standards of practice that distinguish it from less regulated markets. For new and experienced brokers alike, the LDPSF serves not merely as a set of constraints but as a professional roadmap that, when followed diligently, leads to better client outcomes, reduced professional liability risk and a more successful practice. The continuing evolution of the LDPSF in response to market developments and technological change ensures that the regulatory framework remains relevant and effective in protecting Quebec consumers while supporting innovation and competition in the mortgage market.
The LDPSF establishes a comprehensive framework for the distribution of financial products in Quebec that extends beyond basic licensing requirements. The law mandates specific organizational structures for brokerage firms, including requirements for the appointment of a compliance officer responsible for overseeing adherence to all regulatory obligations. This compliance infrastructure ensures that individual brokers operate within a supervised environment that promotes adherence to professional standards.
Continuing education requirements under the LDPSF ensure that mortgage brokers stay current with evolving regulations, market conditions, and professional best practices. The mandatory training units cover a range of subjects including regulatory updates, ethics, anti-money laundering procedures, and technical knowledge relevant to mortgage brokerage. These requirements reflect the recognition that maintaining professional competence is an ongoing obligation, not a one-time qualification threshold.