Bank of Nova Scotia to pay $1.4-billion fine for $3.5-billion over $5-million mistake
Bank of Canada governor Stephen Poloz has said he will pay a $1-billion financial penalty over $3-billion in mistakes in the way it sold mortgages in the run-up to the 2008 financial crisis.
Poloz, who said in a statement that he is “extremely proud” of the outcome, is the first central bank governor in recent memory to pay a fine.
He also said he is willing to work with the regulator to find a way to prevent similar mistakes in future.
“I am extremely proud of the decision I made to pay the $1 billion fine and the work I’ve done to find ways to avoid future mistakes,” Poloz said in the statement.
Today’s settlement provides important guidance for banks and regulators to work together to ensure that mortgage lending practices are in line with the law and to ensure we don’t see another financial crisis.” “
For decades, our regulators have stood up for the rights of homeowners and lenders, as well as the rights and needs of the community.
Today’s settlement provides important guidance for banks and regulators to work together to ensure that mortgage lending practices are in line with the law and to ensure we don’t see another financial crisis.”
The bank’s CEO, Carolyn Wilkins, and chief executive officer John Riddell are due to speak to the Financial Stability Board (FSB) on Thursday.
The FSB will consider a statement of conclusions from the investigation and any recommendations it may make.
The regulator also has two other banks to follow-up with: TD Bank and RBC.
The three lenders each admitted to misselling mortgages in 2008 and 2010.
TD agreed to pay about $9-billion and RBS paid $3 billion in a $6-billion deal.
The Canadian bank and Rbc did not respond to requests for comment.
Polos statement said he was “extremely disappointed” that the banks failed to act on the recommendations.
The regulators also said the banks had to correct mistakes in mortgage origination and mortgage securitization, two areas of the banking sector that are key to the economy and are critical to the country’s financial stability.
“In particular, the banks must make sure they take the necessary steps to ensure the integrity and completeness of the mortgages they purchase and sell, and the integrity of the lending process that takes place on their behalf,” Polos said.
Polios statement also called on the banks to work to reduce the risk of other similar mistakes, including through tighter supervision and more transparent processes.
The banks said in their statement they are reviewing the fine and will cooperate fully with the FSB and its enforcement officers.