IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, as amended (the “Act”), in particular sections 16 and 21;

AND IN THE MATTER OF CORY MCNAUGHT

NOTICE OF PROPOSAL TO REFUSE TO RENEW LICENCE

TO: Cory McNaught

TAKE NOTICE THAT pursuant to sections 16 and 21 of the Act, and by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the “Chief Executive Officer”), the Director, Licensing (the “Director”) is proposing to refuse to renew the mortgage agent licence issued to Cory McNaught.

Details of these contraventions and reasons for this proposal are described below. This Notice of Proposal includes allegations that may be considered at a hearing.

YOU ARE ENTITLED TO A HEARING BY THE FINANCIAL SERVICES TRIBUNAL (THE “TRIBUNAL”) PURSUANT TO SECTIONS 21(2) AND 21(3) OF THE ACT. A hearing by the Tribunal about this Notice of Proposal may be requested by completing the enclosed Request for Hearing Form (Form 1) and delivering it to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you. The Request for Hearing Form (Form 1) must be mailed, delivered, faxed or emailed to:

Address:
Financial Services Tribunal
25 Sheppard Avenue West, 7^th Floor Toronto, Ontario
M2N 6S6

Attention: Registrar

Fax: 416-226-7750

Email: contact@fstontario.ca

TAKE NOTICE THAT if you do not deliver a written request for a hearing to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you, orders will be issued as described in this Notice of Proposal.

For additional copies of the Request for Hearing Form (Form 1), visit the Tribunal’s website at www.fstontario.ca

The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal (“Rules”) made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended.  The Rules are available at the website of the Tribunal: www.fstontario.ca.  Alternatively, a copy can be obtained by telephoning the Registrar of the Tribunal at 416-590-7294, or toll free at 1-800-668-0128 extension 7294.

At a hearing, your character, conduct and/or competence may be in issue. You may be furnished with further and or other particulars, including further or other grounds, to support this proposal.

REASONS FOR PROPOSAL

I. INTRODUCTION

1. These are the reasons for the proposal by the Director to refuse to renew the mortgage agent licence issued to Cory McNaught (“The Applicant”).
2. The Director believes, on reasonable grounds, that the Applicant is not suitable for licensing having regard to circumstances prescribed under the Act. Specifically, the Applicant’s past conduct affords reasonable grounds for belief that he will not deal or trade in mortgages in accordance with the law and with integrity and honesty.

II. BACKGROUND

FSRA Licensing History

3. The Applicant has been licensed as a mortgage agent since March 31, 2018 (Licence # M15001718).

Real Estate Council of Ontario (RECO) Licensing

4. The Applicant is licensed by RECO as a real estate brokerage which operates as McNaught Real Estate.
5. On March 10, 2020, the Applicant was notified by RECO of a complaint against him which he confirmed. On October 15, 2020, RECO advised the Applicant of an investigation into the complaint.
6. The Applicant entered into an agreed statement of facts and penalty in which he agreed he failed to comply with the Real Estate and Business Brokers Act, 2002 (REBBA) Code of Ethics. The Applicant agreed he breached the Code of Ethics by advising and/or encouraging a client to purchase a property beyond the client’s financial means, and in advising and/or counselling his client to engage in misleading and/or deceptive conduct in respect of the client’s financial situation and banking information
7. On April 19, 2024, by way of a discipline decision and reasons for decision, the Applicant was ordered to pay a penalty of $20,000 and complete a course in Ethics in Business Practice.

Applications to Renew the Licence

8. On March 18, 2020, April 23, 2020, February 2, 2021, February 8, 2022, and March 7, 2023, The Applicant submitted applications to FSRA to renew his licence.
9. On all applications, the Applicant falsely answered “no” when asked if he had ever had a complaint made against him to a regulatory body.
10. On all applications, the Applicant falsely answered “no” when asked if he had ever been the subject of a disciplinary proceeding or the subject of an investigation relating to a disciplinary proceeding.
11. On all applications, the Applicant declared he had truthfully answered all application questions, and certified he understood that “providing false, misleading or incomplete information” may be sufficient grounds to reject the application.

III. GROUNDS FOR REFUSAL TO RENEW LICENCE

12. Section 16(4) of the Act states that the Chief Executive Officer shall renew the licence of an applicant who satisfies the prescribed requirements for renewal of the licence unless the Chief Executive Officer believes, on reasonable grounds, that the applicant is not suitable to be licensed having regard to such circumstances as may be prescribed and such other matters as the Chief Executive Officer considers appropriate.
13. Section 10 of Ontario Regulation 409/07 under the Act, states that in determining whether an individual is not suitable to be licensed as a mortgage broker or agent, the Chief Executive Officer is required by subsections 14(1) and 16(4) of the Act to have regard to the following prescribed circumstances:
    1. Whether the individual’s past conduct affords reasonable grounds for belief that he or she will not deal or trade in mortgages in accordance with the law and with integrity and honesty.
    2. Whether the individual is carrying on activities that contravene or will contravene the Act or the regulations if he or she is licensed.
    3. Whether the individual has made a false statement or has provided false information to the Chief Executive Officer with respect to the application for the licence.
14. The Mortgage Broker Regulators’ Council of Canada (MBRCC) Code of Conduct for the Mortgage Brokering Sector (Code of Conduct) has been adopted by FSRA into its supervisory framework and can also be used to assess suitability regarding the prescribed factors from section 10 of Ontario Regulation 409/07. The Code of Conduct has ten principles that outline professional conduct that Canadians can expect when working with Mortgage Brokers. The ten principles listed are: Compliance / Outcomes, Accountability, Honesty, Competence, Suitability, Disclosure, Management of Conflicts of Interest, Security and Confidentiality, Stewardship, and Co-operation with Regulator.
15. The Applicant is not suitable to be licensed as a mortgage agent. His past conduct as a real estate agent, and repeat failure to disclose the RECO complaint, investigation and disciplinary proceedings to FSRA, gives the Director reasonable grounds for belief that the Applicant will not deal or trade in mortgages in accordance with the law and with integrity and honesty if licensed.
16. The public interest cannot be adequately protected by attaching terms or conditions to the licence.
17. Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, September 27, 2024.

Original signed by

Yovanka McBean
Director, Licensing (A)

By delegated authority from the Chief Executive Officer

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