In a private speech to the Real Estate Council of B.C., the province’s top financial regulator warned realtors “your business is dead” if the public loses trust.
Superintendent of real estate Carolyn Rogers also said she is “worried” that risk conditions prevalent in B.C.’s housing market are “creating many other risks” across the financial system.
The text of the March 31 address by Superintendent of Real Estate Carolyn Rogers was obtained by The Province.
Rogers oversees a number of financial sectors as the chief of FICOM. What is striking in her speech to the self-regulating council is how concerned the government is about systemic risks connected to real estate, and Rogers’ warning that the industry’s “privilege” of self-regulation is in danger.
Rogers told realtors this was only her second visit to a council meeting in six years as FICOM’s chief.
“The fact that I didn’t spend a lot of time focused on your sector was a sign that you were very low on the list of things I worried about,” Rogers said. “Well, I’m back. And I am worried.”
Rogers told the council she has “spent little time on anything but your sector in the last two months,” but she said other sectors face similar concerns. “The conditions that have (bred) the issues in your sector of late are affecting many areas of the financial sector that we regulate, and creating many other risks,” Rogers said.
“But your sector has captured the attention of the media, and in turn the attention of the public and the politicians.”
Rogers stressed it is false for realtors to dismiss media scrutiny by saying, “This is just a few bad apples.”
“Let me be clear — we have a problem and it’s not the media,” Rogers said.
“Your business rests on the public’s trust. You handle what is, for most, the single largest financial transaction they will ever make. If they don’t trust you to act in their interest, your business is dead.”
British Columbia’s superintendent of real estate Carolyn Rogers.
The speech came in the early stages of a special panel review of industry problems including widespread failures to report identities of clients, leading to money-laundering concerns, and allegations that realtors are colluding with certain clients to scam home-sellers in so-called assignment clause flipping schemes.
Rogers told the council on March 31 the panel “has met several times now and I would describe us as still firmly in the information gathering stage.” Nevertheless, in early April the panel filed an “interim report.”
In an interview Tuesday, Rogers said the panel is moving towards increasing fines and penalties on rogue realtors who see minor fines “as a cost of doing business” in Vancouver’s soaring market.
In her speech, Rogers hammered the point that too many realtors are failing in their duties of self-regulation, which “like any great privilege, comes with great responsibility.”
She said that she has heard numerous reasons why realtors do not report on bad actors, including fear of reprisals from colleagues or firing by bosses, but these excuses are “not acceptable.”
“Self-regulation works when an industry holds itself to a higher standard than anyone else does,” she said. “Self-regulation puts on each of you a positive obligation to report any, and all bad behaviour — anything that has the potential to harm the public — there are no exceptions.”
On that point, Rogers told reporters Tuesday that the panel may look at redefining the council’s oversight, which sometimes overlaps with that of various real estate boards. Rogers also said the panel could examine whether “double-ending” — having a realtor represent both buyer and seller in a sale — is a fair practice that should continue in B.C.
NDP MLA David Eby
NDP MLA David Eby, a critic who says the council is not capable of self-regulation, said the message of Rogers’ speech is, “There can’t be a conspiracy of silence.”
Eby said, though, he understands why realtors are not confident in reporting others to the council, because it mostly seems to issue wrist slaps in punishment.
“There are no consequences, except professional consequences,” Eby said. “Someone pays a $1,000 fine and then comes back to work and makes your life miserable. So until more licences are cancelled, that is the problem.”
Eby said he believes the risk factors Rogers spoke of in the speech include B.C. banks that are currently issuing 50-per-cent mortgages to offshore buyers with no proof of income, which raises concerns of exposure to bad debt and money laundering.
