A sold house is pictured in Vancouver, B.C.Rafal Gerszak/The Globe and Mail
B.C.'s private real estate boards should no longer be able to smooth over or bury complaints from the public, a panel examining unscrupulous practices within the real estate industry will recommend in its final report on Tuesday.
Instead, the panel will urge that any case alleging harm to the public should be handled by the industry's self-regulator, the Real Estate Council of British Columbia, The Globe and Mail has learned.
As part of an effort to restore public confidence, the panel will release more than a dozen recommendations, including that realtors guilty of misconduct – including defrauding or lying to clients – should face maximum fines at least five times the council's current penalty of $10,000. One source said the fines recommended would exceed $50,000.
The panel also recommends beefing up enforcement to investigate public complaints, another source said.
But a client who went through an 18-month ordeal to get justice after her realtor forged documents fears the recommended change could give greater power to the council, the public accountability of which she doubts after it fined the realtor in her case thousands of dollars less than what his local real estate board meted out.
British Columbia's 11 real estate boards' ability to discipline members secretly for offences ranging from double-dealing to undercutting fellow agents has been among the issues raised in an ongoing investigation by The Globe and Mail.
Outrage over Globe coverage of some realtors' practices in Metro Vancouver's frothy market prompted the council to convene the panel earlier this year examining its effectiveness, with oversight from B.C.'s Superintendent of Real Estate, Carolyn Rogers. At the time, Premier Christy Clark declared she was losing patience with the self-regulating industry.
Ms. Rogers, leader of the advisory group, has previously voiced concern over these boards – "large, well-resourced and powerful trade organizations," she has called them – playing a unique role in meting out private discipline.
Janet Mackenzie, a Vancouver regulatory affairs executive whose former agent was fined $2,500 by the council and $10,000 by his local board for admitting to forgery, said she felt that neither of the bodies that handled her complaints worked in her interest.
She said the panel should recommend that instead of a maximum fine, a realtor found guilty of misconduct should return any money made on the deal to their client.
"In order to be a deterrent, they have to stand to lose more than they stand to gain," she said.
The group's recommendations could herald the first major changes to the real estate council's regulatory approach since 2005, when a new law empowered it to make its own rules to oversee all of British Columbia's licensed realtors.
Prominent realtors and critics of the industry have been outraged that agents in Metro Vancouver disciplined for wrongdoing have been facing fines and suspensions dwarfed by the sizable commissions they can earn in the region's superheated housing market. In the misconduct cases where the council does impose financial penalties, only a fraction of agents ever lose their licences, and fines averaged $4,850 or less, according to a Globe investigation into more than 100 recent disciplinary proceedings.
Earlier this year, the Greater Vancouver real estate board that guards access to the valuable Multiple Listing Service database for thousands of the area's realtors voted to increase its maximum fines to $30,000, but its disciplinary decisions are kept secret, even from those who submitted the complaints.
Agent Danny Gerbrandt resigned from that board last month in frustration over how it is run. He said many complaints from the public did not get looked at because a staffer sent them back to the brokerage involved.
"You have one person deciding whether stuff gets looked into or not," Mr. Gerbrandt said. "A few managers know each other well. One manager talks to another manager; there's a bit of wrist slapping."
Mr. Gerbrandt and other realtors said even though the panel's recommendations mean industry would still regulate itself, the council would face more pressure to impose the stiffer penalties.
"It's still self-regulated, but it's a step in the right direction," Mr. Gerbrandt said. "I want the bad guy to be not in the business – because it gives us all a bad name. Get the problem-makers out of the business and stop hand-holding them."
David Eby, the British Columbia NDP's housing critic, welcomed the recommendation for streamlining of public complaints to the council.
"I can see how something like this started, [the boards] have set up this proprietary [MLS] system and they only want to give access to the system presumably to real estate agents that are trustworthy," he said. "So I can see how they got to the point of running a parallel complaints system, but clearly, it's just confusing people and it's not serving the needs of the public around realtor accountability."