- Penalties for misconduct ‘simply not credible,’ group says
- Increase to maximum of C$500,000 for brokerages recommended
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.
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.