Natalie Obiko Pearson
REP
Real estate brokers who engage in misconduct may face as much as a 25-fold increase in penalties in British Columbia, where its biggest city, Vancouver, is one of North America’s hottest housing markets.
The maximum fine on a brokerage should be increased to C$500,000 ($384,000) from C$20,000, said an independent group tasked with finding ways to better regulate an industry that’s been accused of fomenting the run-up with unethical practices. The cap for an individual agent should be raised to C$250,000 from C$10,000, the group said.
“Penalties and sanctions are simply not credible,” Carolyn Rogers, the Canadian province’s top financial regulator and chair of the group, said at a news conference in Vancouver Tuesday. “They’re not deterring misconduct.”
The group’s final report is the result of an examination of the industry that began in February after a local media report revealed how some brokers were earning multiple commissions by helping a property trade hands repeatedly before a deal closed, inflating its price in the process.
The findings paint a “troubling picture” of the real estate industry, provincial Finance Minister Michael de Jong said in a statement. The government plans to announce actions to strengthen consumer protection on Wednesday, he said.
Whistle-blower Programs
The report contains 28 recommendations targeting both the industry self-regulator, the Real Estate Council of British Columbia, and the provincial government. They include:
Prohibit agents from representing both the buyer and seller Require that half of the self-regulator’s members aren’t from the industry. Currently, only three of the 14 members are from outside the sector. Set up whistle-blower programs so that brokers can more confidently report misconduct without fear of retaliation Give the Superintendent of Real Estate, the industry watchdog, more powers to strengthen oversight of the self-regulator.
Robert Fawcett, executive officer of B.C.’s real estate council, said the self-regulator was reviewing the recommendations with trade associations and the government, and pledged a “swift implementation” of the proposals. It plans to appoint an implementation panel with three weeks.
Public pressure for a crackdown has been mounting amid a rapid surge in Vancouver home prices, where the price of a detached home rose 37 percent in the past year to top C$1.5 million.
Rogers said the group expected a follow-up report within 18 months to see to what degree the recommendations are implemented.
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