Free ON MB Practice Questions: Compliance, Advertising, and Records

Use this page to isolate Compliance, Advertising, and Records before returning to mixed FSRA Mortgage Broker practice.

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Sample questions

These are original Finance Prep practice questions aligned to this topic area. They are not official exam questions, copied live-exam content, or exam dumps. Use them for self-assessment, scope review, and deciding what to drill next.

Question 1

Topic: Compliance, Advertising, and Records

A Principal Broker reviews a sample of closed files after a borrower complaint. One file has no documented suitability rationale and no evidence that the borrower received the required cost and conflict disclosures before committing to the mortgage. The agent says the lender funded the deal, the borrower signed the commitment, and “most brokerages only keep the lender’s package for this type of file.” The brokerage’s internal checklist also marks the missing items as “preferred, not mandatory.” What is the best response?

• A. Treat the missing documentation and disclosures as a brokerage compliance issue, correct the file where possible, document the review, and update supervision so regulatory requirements are not treated as optional.
• B. Leave the checklist unchanged because internal brokerage procedures determine which file documents are mandatory.
• C. Accept the file as compliant because the lender funded the mortgage and the borrower signed the lender’s commitment.
• D. Rely on the common industry practice described by the agent unless FSRA has already contacted the brokerage about the file.

Best answer: A

What this tests: Compliance, Advertising, and Records

Explanation: Regulatory accountability is not displaced by a lender’s funding decision, an internal checklist, or informal industry habits. A brokerage must be able to show that it met its Ontario compliance obligations, including appropriate disclosure, file documentation, suitability reasoning, and supervision. The Principal Broker should respond as a compliance and control issue: identify what is missing, correct or supplement the record where possible, document the review, and adjust policies, training, or supervision so staff do not treat regulatory duties as optional preferences. Lender acceptance may be relevant to underwriting, but it is not proof that the brokerage satisfied its obligations to the borrower or to FSRA.

• Lender funding and a signed commitment do not prove that the brokerage made required disclosures or documented suitability.
• Internal procedures can support compliance, but they cannot downgrade regulatory obligations to optional preferences.
• Informal industry practice is not a defence to non-compliance, especially after a borrower complaint and file deficiencies are identified.

FSRA accountability rests with the brokerage and its licensed individuals, so lender acceptance or internal preference cannot override required disclosure, suitability, and supervision obligations.

Question 2

Topic: Compliance, Advertising, and Records

An Ontario mortgage brokerage is preparing for a compliance review. FSRA has asked the Principal Broker to demonstrate that closed mortgage files, advertising approvals, and complaint records from the required retention period were retained, protected from unauthorized access, and retrievable for review. The brokerage uses a cloud document-management system and a written records policy.

Which evidence would best demonstrate that the brokerage is meeting this records-management duty?

• A. A vendor brochure stating that the cloud platform is secure and commonly used by financial services firms
• B. A copy of the written records policy and a statement from the Principal Broker that staff are expected to follow it
• C. Emails from agents confirming that they usually upload documents when a transaction closes
• D. System audit reports showing file storage dates, user access permissions, access logs, backup status, and successful retrieval of sampled records requested for review

Best answer: D

What this tests: Compliance, Advertising, and Records

Explanation: A brokerage must be able to show more than the existence of a records policy. The useful evidence is evidence that the control actually operated: records were stored for the required period, access was limited to appropriate users, activity was logged, backups or other protection measures existed, and requested records could actually be produced. In a compliance review, sampled retrieval is especially important because it proves that records are not merely intended to exist but are available for review. A policy, vendor marketing material, or informal staff confirmation may support a broader compliance file, but they do not by themselves prove retention, protection, and retrievability.

• A written policy is necessary but does not prove staff followed it or that records can be produced.
• Vendor marketing material describes a platform, not the brokerage’s actual records, permissions, backups, or retrieval results.
• Agent emails are informal and do not show complete retention, controlled access, or successful production of records.

Operating evidence from the records system shows retention, security controls, and actual retrievability of the required records.

Question 3

Topic: Compliance, Advertising, and Records

A mortgage broker supervises an Ontario mortgage agent level 2 who posted a social media advertisement without the brokerage’s approval. The post says, “FSRA-approved mortgages, guaranteed 2.99%, no brokerage or lender fees.” The brokerage is not approved by FSRA to advertise any specific mortgage product, the rate is available only to some borrowers, and fees may apply on files like the ones promoted. Two borrowers have already contacted the agent because of the post. What is the best broker response?

• A. Have the post removed immediately, preserve a copy, ensure the borrowers receive accurate information, document the incident, and escalate it through the brokerage’s compliance process.
• B. Allow the post to remain online until the agent confirms whether either borrower actually qualifies for the advertised rate.
• C. Tell the agent to add the brokerage licence number to the post and continue using it because the agent is licensed.
• D. Delete the post without retaining a copy or notifying anyone, because removing it cures the compliance issue.

Best answer: A

What this tests: Compliance, Advertising, and Records

Explanation: A broker-level response to a potentially non-compliant advertisement should address both consumer protection and brokerage accountability. The advertisement contains several red flags: it implies FSRA approval of a mortgage product, guarantees a rate that is conditional, and says there are no fees when fees may apply. Because borrowers have already relied on the advertisement enough to contact the agent, the brokerage should not merely edit the post and move on. The appropriate response is to stop further harm, preserve evidence of what was published, correct information provided to affected borrowers, document the incident, and escalate it under the brokerage’s compliance and supervision procedures. The Principal Broker or compliance lead can then determine training, file review, discipline, and any further regulatory steps.

• Waiting to see if borrowers qualify ignores the misleading nature of the advertisement and allows further consumer harm.
• Adding a licence number does not fix inaccurate claims about FSRA approval, guaranteed rates, or fees.
• Deleting the post without records weakens the brokerage’s ability to investigate, supervise, and demonstrate corrective action.

This response stops the misleading communication, protects affected borrowers, preserves evidence, and activates supervision and compliance controls.

Question 4

Topic: Compliance, Advertising, and Records

An Ontario mortgage brokerage’s Principal Broker reviews a file before commitment. The borrower was referred by a real estate salesperson who will receive a referral fee from the brokerage if the mortgage closes. The assigned mortgage agent recommends Lender B, which pays the brokerage a higher bonus during the current quarter. The file also shows that Lender A offered a similar approval with lower total borrowing cost, but the agent’s notes only say, “Client prefers fast closing.” The borrower has not been told about the referral fee or the quarterly bonus arrangement.

What should the Principal Broker do before allowing the file to proceed?

• A. Tell the agent to remove Lender A from the file notes so the borrower is not confused by multiple lender choices.
• B. Require clear disclosure of the referral fee and compensation incentive, document the suitability comparison, and confirm the recommendation is supported by the borrower’s needs.
• C. Allow the file to proceed because compensation paid by lenders and referral sources is a normal part of mortgage brokerage business.
• D. Decline all referrals from real estate salespersons because referral fees always prevent a brokerage from giving suitable mortgage advice.

Best answer: B

What this tests: Compliance, Advertising, and Records

Explanation: A Principal Broker must treat compensation and referral arrangements as consumer-protection and supervision issues when they could affect client understanding or recommendation quality. The issue is not that a referral fee or lender-paid incentive exists. The problem is that the borrower has not been informed and the file does not show why the higher-cost recommendation is suitable compared with the available lower-cost alternative. Before the file proceeds, the brokerage should ensure transparent disclosure, document the relevant comparison, confirm the borrower’s needs and priorities, and address any agent coaching or file-control weakness. A brief note such as “fast closing” is not enough when the compensation facts could create a perceived or actual conflict in the recommendation.

• Treating compensation as normal business ignores the need for disclosure and documented suitability when it may influence the recommendation.
• Removing Lender A from the notes would weaken the record and undermine transparent supervision.
• Referrals are not automatically prohibited, but referral fees must be managed so clients understand the relationship and the recommendation remains supportable.

Compensation and referral facts that may affect client understanding or recommendation quality must be disclosed and managed through documented suitability review and supervision.

Question 5

Topic: Compliance, Advertising, and Records

A borrower complains to the Principal Broker that an agent quoted a “no brokerage fee” renewal refinance, but the final package included a brokerage fee payable by the borrower. The file contains no written disclosure of the fee before the borrower accepted the mortgage terms. A quick review of recent files shows the brokerage’s standard checklist asks agents to confirm “fees discussed,” but does not require evidence of written fee disclosure or a supervisor sign-off before submission.

What is the best response by the Principal Broker?

• A. Suspend all refinance submissions until FSRA completes an investigation into the brokerage’s fee-disclosure process.
• B. Resolve the borrower’s fee dispute directly with the agent and keep the checklist unchanged because the problem arose from one agent’s communication error.
• C. Revise the checklist for future files but take no further action on the complaint because the borrower ultimately received the mortgage documents before closing.
• D. Investigate and address the borrower’s complaint, correct the file and any consumer harm, document the findings, and update the brokerage’s fee-disclosure controls, training, and file-review process.

Best answer: D

What this tests: Compliance, Advertising, and Records

Explanation: A Principal Broker must look beyond the individual transaction when a complaint reveals a weakness in brokerage controls. The missing written fee disclosure is a file-level problem that may require correction, client communication, documentation, and possible remediation. The checklist gap is a management problem because it allowed agents to proceed without evidence that key borrower-facing disclosures were made and reviewed. A strong response combines complaint handling, file correction, supervision of the agent, and improvement of the brokerage’s procedures, such as requiring written fee disclosure evidence and supervisory review before submission or closing. Treating the issue only as an agent mistake would leave the systemic weakness in place. Ignoring the complaint because documents were eventually provided also fails to address consumer-protection risk.

• Treating the matter as only one agent’s communication error misses the checklist weakness and the Principal Broker’s supervision responsibility.
• Changing the checklist without addressing the borrower’s complaint leaves the immediate consumer-protection issue unresolved.
• Stopping all refinance business pending a FSRA investigation is disproportionate on these facts and skips the brokerage’s own duty to investigate, remediate, and strengthen controls.

This response addresses both the agent’s file-specific error and the brokerage’s broader control weakness that allowed undocumented fee disclosure.

Question 6

Topic: Compliance, Advertising, and Records

A Principal Broker is reviewing a proposed quarterly campaign. Lender X will pay the brokerage an extra volume bonus for every funded mortgage during the campaign. Agents may technically submit to other lenders, but the draft sales script calls Lender X “our best-priced lender” and the campaign checklist says to recommend Lender X first unless the borrower objects. Recent files show some borrowers had lower total-cost alternatives, and the files contain only a generic note that the brokerage “may receive compensation from lenders.” What is the best action?

• A. Cancel all compensation from Lender X because any lender incentive is automatically prohibited for an Ontario mortgage brokerage.
• B. Pause the campaign and approve it only after removing the misleading script, requiring documented suitability comparisons, and clearly disclosing the added compensation and conflict.
• C. Allow the campaign because lender-paid compensation is common and borrowers are not paying the volume bonus directly.
• D. Allow the campaign if each borrower signs the generic lender-compensation disclosure already used by the brokerage.

Best answer: B

What this tests: Compliance, Advertising, and Records

Explanation: A lender-paid compensation arrangement is not automatically improper, but it becomes a serious compliance and consumer-protection risk when it affects the advice given to borrowers or is presented in a misleading way. Here, the script claims Lender X is “best-priced” even though recent files show lower total-cost alternatives. The checklist also creates pressure to recommend Lender X before assessing suitability. A generic disclosure that the brokerage may receive compensation is not enough to address a specific volume bonus that could influence recommendations. The Principal Broker should stop the campaign until the misleading language is removed, agents are required to document borrower suitability and product comparisons, and the specific compensation conflict is clearly disclosed and supervised.

• Common lender-paid compensation can be permissible, but it cannot justify advice that is misleading or unsuitable.
• A generic compensation notice does not adequately address a specific incentive that may influence the recommendation.
• Treating all lender incentives as automatically prohibited overstates the issue; the key concern is conflict management, disclosure, suitability, and supervision.

The incentive may be manageable only if it does not drive unsuitable advice and the compensation conflict is clearly disclosed and supervised.

Question 7

Topic: Compliance, Advertising, and Records

A Principal Broker is reviewing a completed file after a borrower complained that they did not realize the agent would receive a referral fee from a service provider recommended during the mortgage process. The file includes the service provider’s invoice, the mortgage commitment, and a generic brokerage disclosure form signed on the closing date. The agent says the referral fee was explained verbally before the borrower chose the service provider, but there are no notes or dated communications showing that discussion.

What is the best next action for the Principal Broker?

• A. Accept the agent’s statement because verbal disclosure is sufficient when the service provider’s invoice is included in the file.
• B. Close the complaint if the referral fee did not increase the interest rate or lender fee charged to the borrower.
• C. Require evidence that the referral-fee disclosure was provided and acknowledged before the borrower selected the service provider, such as a dated written disclosure, client acknowledgment, and file notes of the explanation.
• D. Treat the generic disclosure signed on the closing date as sufficient because the borrower signed the brokerage’s standard form.

Best answer: C

What this tests: Compliance, Advertising, and Records

Explanation: For compensation, referral, and conflict matters, supervision should focus on whether the client received clear information early enough to make an informed decision. A later signature or a generic disclosure may show that a form was signed, but it does not prove the borrower understood the specific referral fee before choosing the service provider. The Principal Broker should look for contemporaneous evidence: a dated written disclosure, client acknowledgment, file notes, email, or similar record showing the explanation, the timing, and the client’s opportunity to ask questions. If that evidence is missing, the brokerage should address the complaint, document the deficiency, and consider corrective training or file-control improvements.

• An agent’s after-the-fact statement does not provide reliable evidence that the client understood the referral arrangement before deciding.
• A generic form signed on closing may be too late and too broad to confirm informed consent about the specific referral fee.
• Whether the referral fee changed the mortgage cost does not eliminate the need for clear disclosure and documented client understanding.

The key issue is whether the borrower received and understood the referral-fee information before making the related decision.

Question 8

Topic: Compliance, Advertising, and Records

A Principal Broker reviews a high-producing mortgage agent’s files and notices a pattern. The agent has been placing debt-consolidation borrowers with a private lender managed by the agent’s spouse. The brokerage receives its normal brokerage fee and an additional volume-based incentive from that lender. The files include basic borrower needs notes and signed mortgage commitments, but they do not include written disclosure of the family relationship or the incentive. Two transactions are scheduled to fund this week, and one borrower has asked whether the lender is “connected to your brokerage.” What should the Principal Broker do first?

• A. Pause the affected files where possible, review suitability and alternatives, give clear written conflict and compensation disclosure to the affected parties before funding, document the review, and impose supervision or corrective training on the agent.
• B. Allow the files to fund because the borrowers signed the commitments and the file notes show that the mortgages met their stated needs.
• C. Terminate the lender relationship immediately and cancel all pending transactions involving that lender, regardless of borrower instructions or available alternatives.
• D. Remove the agent from future files involving that lender, but avoid reopening current files because disclosure at this stage could delay funding.

Best answer: A

What this tests: Compliance, Advertising, and Records

Explanation: A conflict involving a family relationship and volume-based incentive can affect, or appear to affect, the agent’s recommendation. The Principal Broker should manage the conflict before the transactions fund, not merely record it afterward. A balanced response is to pause or slow the affected files where possible, confirm whether the recommendation remains suitable, ensure borrowers and any affected lender or investor parties receive clear written disclosure, and document the review and client instructions. The Principal Broker should also address the control failure through supervision, coaching, monitoring, and any needed policy correction. The goal is not automatically to cancel every transaction, but to ensure that decisions proceed only with informed parties, fair treatment, and evidence that the brokerage managed the conflict properly.

• Signed commitments and basic needs notes do not cure an undisclosed relationship or incentive that could influence advice.
• Removing the agent only from future files ignores current consumer-protection and documentation risks.
• Automatically cancelling all pending transactions may harm borrowers if a suitable, fully disclosed option remains available.
• A documented pause, disclosure, suitability review, and supervision response treats the conflict as both a file issue and a brokerage-control issue.

This response addresses the conflict before harm occurs while preserving fair treatment, disclosure, suitability review, documentation, and supervision.

Question 9

Topic: Compliance, Advertising, and Records

A Principal Broker at an Ontario mortgage brokerage receives a borrower complaint. The borrower says an agent was rude and asks for an apology and a refund. The complaint also includes a screenshot from the agent stating, “Approval is guaranteed, and my lender fee is built in so you won’t see it.” The file has no written fee explanation and no notes supporting why the recommended mortgage was suitable for the borrower.

What is the best action for the Principal Broker?

• A. Wait until the borrower files a formal complaint with FSRA before reviewing the file or preserving communications.
• B. Treat it as a compliance matter, preserve the complaint evidence, investigate the file and communications, document findings and remediation, and assess any FSRA response or reporting obligations.
• C. Handle it as a service issue by apologizing, offering a goodwill refund, and closing the matter if the borrower is satisfied.
• D. Ask the agent to call the borrower and clarify the fee wording, with no further review unless the lender or lawyer raises a concern.

Best answer: B

What this tests: Compliance, Advertising, and Records

Explanation: A complaint can begin as a client-service issue but become a compliance matter when the facts suggest regulatory, disclosure, suitability, or supervision concerns. Here, the borrower’s request for an apology and refund is not the only issue. The screenshot suggests a potentially misleading guarantee and an unclear fee representation. The file also lacks written fee disclosure and suitability notes. A Principal Broker should preserve evidence, review the file and communications, investigate what occurred, document the outcome, remediate any harm or control weakness, and determine whether further escalation or FSRA-related action is required. Service recovery may still be appropriate, but it cannot replace compliance handling where evidence points to possible breaches or inadequate supervision.

• A goodwill refund may help the relationship, but it does not address misleading representation, missing fee evidence, or suitability documentation.
• Having the agent clarify the wording delegates away the control issue and fails to preserve and review evidence.
• Waiting for FSRA involvement is reactive and risks loss of evidence, repeated conduct, and weak complaint handling.

The complaint includes potential misleading representation, fee disclosure, and suitability documentation issues that require evidence-based compliance handling, not only service recovery.

Question 10

Topic: Compliance, Advertising, and Records

A Principal Broker at an Ontario mortgage brokerage receives a written complaint from a borrower two days before closing. The borrower says the agent stopped returning calls, advertised the mortgage as “approved with no brokerage fees,” then sent documents showing a $1,500 brokerage fee and a higher rate than the advertisement. The borrower also says the agent told them to “just sign tonight and we can clean up the paperwork later.” A quick file check shows no signed fee disclosure, no written explanation of the rate change, and no complaint log entry. The agent asks to handle it by apologizing and offering a small goodwill credit after closing.

What is the most appropriate broker-management response?

• A. Offer the goodwill credit and close the file after the borrower accepts, because compensation resolves the consumer harm.
• B. Wait until after closing to review the file so the brokerage does not interfere with the borrower’s transaction deadline.
• C. Treat it as a compliance complaint, preserve the file and communications, investigate the disclosure and advertising issues, document findings, remediate before closing if needed, and escalate or report as required.
• D. Allow the agent to resolve it directly because the main issue is poor communication and the borrower can still decide whether to close.

Best answer: C

What this tests: Compliance, Advertising, and Records

Explanation: A missed call or delayed update may be handled as service recovery if there is no sign of a regulatory or consumer-protection issue. Here, the complaint raises compliance concerns: possible misleading advertising, an undisclosed brokerage fee, an unexplained rate change, pressure to sign, and missing file evidence. A Principal Broker should ensure the brokerage’s complaint process is operated, not just documented. That means logging the complaint, preserving records, reviewing the advertisement and communications, checking required disclosures, documenting the investigation, correcting or remediating the issue before the borrower is further affected, and escalating or reporting where required by law, policy, or regulator involvement. A goodwill gesture may be part of customer care, but it cannot replace evidence-based investigation and corrective action.

• An apology alone treats the matter as a service issue and ignores missing disclosure and advertising evidence.
• A credit or refund may reduce harm, but it does not prove the file was compliant or correct a weak control.
• Waiting until after closing increases consumer-protection risk because the borrower may sign without proper disclosure or suitability support.

The facts show possible misleading advertising, missing disclosure, and pressure to sign, so the brokerage needs a documented compliance response rather than only customer-service recovery.

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