A mortgage agent, David, originates a $400,000 mortgage for his client through Lender A. David also recently purchased a significant equity stake (25%) in Lender A. David did not disclose his ownership interest in Lender A to his client before the mortgage was finalized. Which best describes the ethical breach, if any?

Question: A mortgage agent, David, originates a $400,000 mortgage for his client through Lender A. David also recently purchased a significant equity stake (25%) in Lender A. David did not disclose his ownership interest in Lender A to his client before the mortgage was finalized. Which best describes the ethical breach, if any?

Answer options: ✅ David has an undisclosed conflict of interest because his personal financial stake in Lender A could influence his advice.

• There is no conflict of interest as long as Lender A offered the best available rate to the client.
• David only needs to disclose if his ownership stake were 50% or more.
• The conflict is minor and does not require disclosure unless the client asks directly.

Correct answer: David has an undisclosed conflict of interest because his personal financial stake in Lender A could influence his advice.

Explanation: A mortgage agent must disclose any actual or potential conflict of interest that could reasonably be expected to influence their recommendations, including significant ownership interests in a lender, to ensure the client can make an informed decision (e.g., O. Reg. 187/08, s. 18).