A number of mortgage brokerages are being audited by the federal privacy commissioner, due to concerns regarding the security of the borrowers’ personal financial information.
Sources say that the audit began this month. The prime reason behind this audit is to stop the misuse of consumers’ information, which can be used to carry out fraud such as identity theft.
More Information is now required to become eligible
The issue has gained more significance due to the U.S. subprime mortgage crisis, which has led mortgage brokers and lenders to request even more information and documentation from borrowers.
Reason behind the audit
Anne-Marie Hayden, a spokeswoman for the privacy commissioner’s office, said that the reason behind doing this is, that there have been concerns that the personal financial information of Canadians might be falling into the wrong hands. Many cases of breaches have been reported to privacy commissioner’s office over the course of the last year or so.
Ms. Hayden said that it may be too early to say what practices within the industry it might uncover, as the audit is still in the preliminary stages.
According to the Canadian Association of Accredited Mortgage Professionals (CAAMP), the broker channel, made up of about 16,000 brokers, is responsible for about 30 per cent of mortgage activity, whereas more than half of all the mortgages in Canada are sold by the staff of the big banks.
In order to become eligible for the mortgage, borrowers turn over a large amount of information about themselves.
There are policies and procedures to safeguard borrowers data
Most brokerage firms have policies and procedures in place to deal with the safeguarding of borrowers’ data and fraud avoidance, said Jim Murphy, president and chief executive officer of CAAMP. The privacy laws are so strict that there have been instances where brokers have had trouble sharing information with police, he said.
But many people in the industry say that government and regulators need to do more to ensure that brokers are above board.
The privacy commissioner’s audit is being conducted under the Personal Information Protection and Electronic Documents Act, which governs how the private sector must protect consumers’ data.
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