Is it time for a crackdown on B.C.'s real estate industry?
Crucial report to be released this week by Independent Advisory Group on Real Estate Regulation
You have to hand it to Carolyn Rogers.
The head of the Financial Institutions Commission of B.C. clearly has a flair for drama. With just weeks left on the job, Rogers is set to deliver a much-anticipated swan song this week — her report on the state of the province's most hotly debated industry: real estate.
Rogers is leaving her current position to join the body which oversees the entire Canadian banking sector. You might hope that means she has nothing left to lose in her old job and everything to prove ahead of her next one.
She also serves as B.C.'s superintendent of real estate. But Rogers' main job these past four months has been chairing the Independent Advisory Group on Real Estate Regulation, a body hastily convened when it emerged that — surprise! — B.C.'s housing market is becoming a home to greed and depravity on an end-of-days scale.
Surprise! Bad things are happening
The advisory group was formed at the behest of the Real Estate Council of B.C., the regulator which has come in for the lion's share of criticism regarding unscrupulous agents running amok with little to fear in the way of discipline.
The question now will be how substantive a change the advisory group wants to see and whether or not the province has the courage to follow through on its convictions.
"Public confidence in the integrity of the real estate services sector and its regulation has been shaken," Rogers wrote in her interim report.
"Each member of the advisory group has understood that from the moment they accepted their appointment, that part of the role of the IAG is to help restore public confidence that those providing real estate services are held to high legal and ethical standards."
When more than 'assistance' is needed
It's probably no coincidence that with the report looming, the RECBC announced plans this month to hire two new compliance officers.
It also has created a second position for a "professional standards adviser." Job description: "to assist licensees to practice in a professional manner consistent with the requirements of the legislation and to assist consumers in understanding licensees' legislated obligations and real estate standards of practice."
The first such position was created in January 2016, wrote Marilee Peters, communications for the Real Estate Council of B.C. in an email to CBC.
The additional job appears to be a nod to concerns expressed in the interim report about real estate agents who gripe to the media but don't report because of fear of repercussions. There is also ignorance from both licensees and the public about the services available to fight misconduct.
But many would argue that something a lot tougher than "assistance" is needed to set things right.
In the past decade, the cost of a home in the Lower Mainland has risen astronomically. Prices have soared in other parts of the province as well.
Not surprisingly, the flow of cash has seen a commensurate rise in the number of newly minted real estate agents.
Their ranks include people like Ryan Rana, whose licence was suspended in April with the ink still barely dry after he admitted to sending a mortgage broker friend to write his final exam for him.
His case may be extreme, but the point is simple.
Licensed real estate agents are involved in the promotion and sale of assets worth millions of dollars. Many believe the B.C. market's dramatic rise has been driven by foreign investors who view housing as just another stock.
An independent provincial agency governs professionals who deal in securities. Why should real estate be any different? Some question whether in the high-stakes game B.C. real estate has become, a self-regulating real estate industry is regulated enough.
A call for clarity
At the time the interim report was issued, one of the other crucial issues Rogers said she planned to explore was the role of the B.C. Real Estate Association and the real estate boards which serve B.C.'s more than 20,000 agents.
In addition to advancing the interests of the real estate industry, the boards also deal with complaints about ethical and business practice violations. Unlike the RECBC, they don't publish their findings.
"The IAG's concern is that these blurred lines appear to dilute responsibilities and accountabilities of the council and make it unnecessarily difficult for consumers to navigate the complaint process," Rogers wrote.
"We are also concerned that the trade associations have assumed the role of triaging consumer complaints and are doing so with no requirement for public transparency or reporting to the council."
Looking to the interim report for some hint of what's to come later this week suggests a call for transparency in the regulation of a multi-billion dollar industry that is a key driver of B.C.'s economy.
That might mean the end of double-ending deals in which the same agents represent both seller and buyer; it might mean penalties well above the current limit of $10,000; and it might mean tougher standards to enter the industry.
History has shown Rogers hasn't been afraid to ruffle feathers in the past. She angered many mortgage brokers earlier this year by floating a suggestion that they be forced to disclose the exact amount of their commissions. New rules are expected to be announced in September.
No matter how much clarity Rogers is able to inject into real estate regulation — even if she calls for an end to self-regulation and the death penalty for shadow flippers — her review won't answer the simple question plaguing a lot of British Columbians when it comes to real estate these days: Why can't I afford a house?