Province plans to fire Alberta real estate council to deal with dysfunction
KPMG review recommended dismissal as ‘most effective and timely’ way to handle governance problems
The province will fire all eight remaining members of the Real Estate Council of Alberta and appoint an official administrator, actions recommended by a consultant asked to investigate "significant conflict" on the council.
"They have been focused on their own internal relationship differences and on trivial matters," Service Alberta Minister Nate Glubish said Wednesday, shortly after introducing the Real Estate Amendment Act 2019 in the Alberta legislature.
"By every measure, the Real Estate Council of Alberta has received a failing grade."
The proposed legislation gives Glubish the power to implement the recommendations.
If the legislation is passed, the official administrator will take over the functions of RECA, which regulates Alberta's real estate industry, for up to a year, and oversee the transition to a new council.
'A number of problems'
In 2018, RECA licensed 12,639 real estate brokers and sales associates, 2,319 mortgage brokers and associates and 634 appraisers. The council also disciplines and trains members.
The decision was praised Thursday as being "a great first step" by the CEO of the Alberta Real Estate Association, an association that represents most of the 11,000 realtors in the province.
"There have been a number of problems over the last few years," Brad Mitchell told CBC Radio's Edmonton AM. "The minister a few weeks ago put out a ministerial order stopping new advertising regulations proposed by council. And he was quite aggressive by saying the regulations didn't protect the public and they were going to cost industry between $35 and $50 million."
The review by the auditing company KPMG was launched in January 2019 after Service Alberta received several dozen complaints from industry and the public dating back to 2016.
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Toxic and dysfunctional interpersonal relationships within the 12-member council, between the council and RECA administration and the council and industry were cited in the review as problems too entrenched to be remedied.
"Based on the evidence outlined, it would appear that the most effective and timely way to resolve council's governance challenges would be to dismiss all council members," said the report, sent to the minister in June.
"There are too many issues with the current composition and operations of council to enable an effective governance body."
The report outlined poor relations with the industry associations represented by RECA and a tendency for members to spend 80 per cent of their time discussing governance issues, instead of considering the strategic and regulatory matters that are the reason for the council's existence.
Font size on signs
Mitchell said RECA's planned advertising regulations addressed the font size on real estate signs, dictating that the realtor's name had to be in the same size as the brokerage name, was a "red tape regulation that simply didn't make a lot of sense."
"We thought it was made up at the beginning but it really wasn't," Mitchell said.
"It's a very good example of how when regulators aren't accountable to the government, and not accountable to the industry and not accountable to their own council, they can start to get away with things. And it really didn't help anybody."
Council members weren't exercising sufficient oversight over RECA finances and spending, the report said.
The KPMG report said the council doesn't have enough public members as 10 of the 12 spots on the board are members of the real estate industry. Glubish said one industry association's ability to control most of the spots contributed to the problems identified in the report.
Four members resigned from the council following the release of the KPMG report. The remaining eight will be dismissed by the minister.