Regulator Carolyn Rogers admits she was unaware of some of the problems plaguing the Vancouver real estate market.John Lehmann/The Globe and Mail
She's the top bureaucrat overseeing the real estate sector in B.C. Still, Carolyn Rogers admits she did not realize how wildly speculative Vancouver's market had become until an explosion of public outrage earlier this year.
Ms. Rogers is B.C.'s superintendent of real estate, a job she has held since 2010. Now, she sees houses trading like hot commodities – and it worries her. Ms. Rogers says hearing how buyers and sellers have been burned keeps her up at night.
"What we have in Vancouver is absolutely extraordinary circumstances. The regulations for real estate … I don't think contemplated the idea that houses would be traded like stocks," Ms. Rogers said. "You will always be accused of one of two things if you are a regulator. You will be accused of acting too soon … or you will be accused of being asleep at the switch."
Ms. Rogers has been in high gear since revelations in The Globe about shadow flipping and other shady practices by realtors. Immediately after the first story broke in February, the government assigned her to oversee an advisory group to figure out how to curb wrongdoing. She said the group has heard enough to conclude real estate regulation needs a major overhaul. For example, she says it will recommend multiplying maximum fines for misconduct by several thousand dollars.
Ms. Rogers is CEO of the Financial Institutions Commission, the provincial regulator that oversees the financial services sector. She has little jurisdiction over licensed realtors. That is because the province handed regulation of licensees over to the Real Estate Council of British Columbia a decade ago, after the industry lobbied to regulate itself. Ms. Rogers' office can only investigate unlicensed activity in real estate and can challenge the real estate council's decisions, although that rarely happens.
"We have a consumer-confidence issue for sure," Ms. Rogers said. "I think if you measured consumer confidence right now, if you measured skepticism, people feel like they are not being treated fairly. That's a big problem."
A key reason, Ms. Rogers said, is interference by the private local real estate boards, which handle complaints in secret, effectively preventing clients from complaining to the regulator, the real estate council. Policing realtors is the job of the council, Ms. Rogers said, not private realtor groups. Too often, she says, agents send upset clients to their local real estate board, where their complaints are smoothed over or buried by the realtors who work on them.
"We've received firsthand accounts from people who feel their complaint was dismissed outright or just not dealt with in a way that was appropriate or transparent," Ms. Rogers said.
Re/Max realtor Ed Ganeff is one of several who told The Globe they have seen that up close. He said he complained to the Real Estate Board of Greater Vancouver because another agent did an end run – going directly to his seller client with a lowball offer, intending to then flip the property. Mr. Ganeff said the board did nothing.
"The public has no idea what is going on behind the scenes," he said, echoing many other agents. "What you can see from this is why realtors never complain – because nothing ever gets done."
In another case, a Vancouver businessman said the board risked his safety by mishandling his complaint. The Globe agreed not to name him. Last month, he said Re/Max realtor Layla Yang threatened to have him killed in a call he recorded. He said that when he e-mailed the board about the disturbing exchange, it referred him to the regulator without investigating. Records show the board then forwarded his confidential complaint – including personal contact information – to Ms. Yang.
"I feel very upset and very uncomfortable about you and your organization treating a complainant like this," the businessman told the board last week, before changing his phone number and e-mail address.
Board president Dan Morrison told The Globe the realtor had a right to know.
"If somebody is accused of something in any situation, it's part of natural justice to inform the person about what they are accused of," Mr. Morrison said, adding no harm was intended.
Ms. Rogers calls the case "very concerning." She said the real estate boards should stop taking complaints from the public. "They have no business in that business."
She acknowledges one of the trickiest challenges is what some see as the elephant in the room in Vancouver's rapidly expanding real estate industry. Many new realtors conduct all their business in Mandarin, which creates language barriers. Ms. Rogers points out that people from other countries also bring new business models, which sometimes clash with Canadian rules and expectations.
"Consumer protection in an environment where people speak different languages and have different cultures is a huge challenge," she said, particularly because there is now a parallel marketplace on Chinese-language websites.
"Technology, globalization – and then just price acceleration. All of those things have put pressure on a regime that just couldn't have contemplated the kind of conditions we have today."
Ms. Rogers said the regulator should adopt the practices securities regulators use to help buyers and sellers understand what is going on. "We need increased transparency. We need more disclosure. We need some different rules for these different conditions, and that's what we are focused on."
Upset buyers and sellers – and some realtors – have told The Globe they want the government to put an end to industry self-regulation. Ms. Rogers said this is not her call.
"I think what we are focused on is making recommendations on how to improve self-regulation," she said. "I think in British Columbia, we have shaken the faith in those things – and that has to be fixed."
The advisory group's report is expected by the end of June. Ms. Rogers will then leave for a new job in Ottawa, as assistant superintendent overseeing Canada's banking system.
ktomlinson@globeandmail.com
Editor's note: An earlier version of this story incorrectly said the Financial Institutions Commission enforces security law. In fact, it oversees the financial services sector. This online version has been corrected.