It is the notification every professional dreads. You apply for your license (or renewal), and FSRA responds not with a certificate, but with a Notice of Proposal to Refuse. The reason? “Material Misstatement.”
Sometimes this stems from a misunderstanding of the question. Sometimes it comes from a fear of disclosing a past employment issue. Regardless of the reason, the consequences can be severe.For years, regulators have often taken a rigid stance: if an applicant provides incorrect information, they are viewed as lacking the necessary integrity to hold a license.
But a groundbreaking new decision from the Ontario Divisional Court has just changed the rules of the game.
The Case That Changes Everything: Ontario v. Ahuja
On November 26, 2025, the Divisional Court released its decision in Ontario (Financial Services Regulatory Authority, Chief Executive Officer) v. Ahuja, 2025 ONSC 6573 (CanLII). The case involved a young applicant facing significant hurdles:
- He had been terminated from a previous position at a financial institution due to allegations regarding sales data.
- He did not disclose this termination on his application to FSRA, instead stating he left voluntarily.
- He subsequently conducted business for a short period before his license was finalized.
FSRA argued that these actions rendered him unsuitable for licensing.
The Court disagreed.
In a significant win for professional defence, the Court ruled that a “material misstatement” is not an automatic bar to entry. The Court confirmed that the Financial Services Tribunal (FST) has the power to grant a “Conditional License” instead of a refusal, even in cases involving significant disclosure errors.
What Is a “Conditional License”?
This is the “middle ground” that allows professionals to move forward. Instead of denying the application, the regulator allows the individual to practice, but with specific safeguards in place for a set period. This might include:
- Enhanced Supervision: A senior agent must oversee transactions.
- Regular Reporting: The supervisor provides updates to FSRA regarding compliance.
- Administrative Penalties: A fine may be issued to address the initial error, without removing the ability to earn a living.
The Court in Ahuja confirmed that if the public can be protected through supervision, a refusal is not always the necessary or proportionate response.
Misstatements Are Not Fatal
FSRA argued that because the applicant came with “unclean hands” (due to the misstatement), he should not be entitled to a remedy. The Court rejected this application of the doctrine.
The decision confirms that professional regulation is not about seeking perfection. It is about risk management. If an applicant has made errors, even serious ones, but demonstrates genuine remorse and “rehabilitative potential,” there should be a path back to compliance.
What This Means For You
If you are facing a Notice of Proposal to refuse or revoke your license, do not accept it as final.
Many professionals assume that a finding of “Material Misstatement” leaves them with no defence. The Ahuja decision proves otherwise. You do not need to prove the error didn’t happen; you need to demonstrate that you are capable of rehabilitation and compliance.
At Tamir Litigation, we specialize in negotiating these “Conditional Licensing” arrangements. We help you build the supervision plan and present the legal arguments that aim to turn a “Refusal” into a second chance.
Your career is worth fighting for.
FAQ: Understanding Material Misstatements & License Refusals
Q: Does a “Material Misstatement” always mean my license will be refused? A: No. While FSRA takes false statements very seriously, the Ahuja decision confirms that it is not an automatic “lifetime ban.” If you can demonstrate that you are capable of rehabilitation, often through mentorship or supervision, you may be eligible for a conditional license instead of a refusal.
Q: What exactly is a “Conditional License”? A: A conditional license allows you to work, but with specific restrictions designed to protect the public. Common conditions include:
- Supervision: You must work under the guidance of a senior, licensed professional who reviews your files.
- Reporting: Your supervisor must send regular reports to FSRA confirming you are following the rules.
- Education: You may be required to take ethics or compliance courses.
- Fines: You may have to pay an administrative penalty for the initial error.
Q: Does this court decision apply to Mortgage Brokers and Real Estate Agents too? A: The Ahuja case specifically dealt with an Insurance Agent, but the legal principles (proportionality and the power to impose conditions) are highly relevant to other sectors regulated by FSRA (like Mortgage Brokering) and potentially other Ontario regulators (like RECO). If you are facing discipline in another sector, this precedent is a powerful tool in your defence.
Q: I simply forgot to mention an old termination. Is that still considered a lie? A: Regulators often view the “failure to disclose” as a lack of candour, regardless of intent. However, an honest mistake is treated differently than calculated fraud. We can help you frame the error as an oversight rather than an attempt to deceive, which supports the argument for a conditional license rather than a refusal.
Q: What should I do if I just received a “Notice of Proposal to Refuse”? A: Act immediately. You typically have only 15 days to request a hearing before the Financial Services Tribunal. If you miss this deadline, the refusal becomes final. Do not try to argue the case yourself in the initial response; contact a regulatory defence lawyer to draft the Request for Hearing and preserve your rights.
This commentary is for informational purposes only and does not constitute legal advice. Contact Tamir Litigation Law Firm today at 416-499-1676 or visit tamirlitigation.com to learn how you can protect your licence and your reputation. You can also message us on WhatsApp for a free initial chat.