Real Estate Council of British Columbia Annual Report Building. Trust

Real Estate Council of British Columbia Annual Report 2018 Building Trust

highlights 2018 Some of our accomplishments over the year include: New Vision, Values and Strategic Plan The development of our 3-year Strategic Plan sets our course to becoming a more proactive, consumer-focused regulator. Raising the Bar through Education Changes to relicensing education program are reinforcing expectations for ethical practice and increased professionalism. Anonymous Tipline Launching the Anonymous Tipline helps overcome barriers to reporting misconduct. This was a key recommendation from the Independent Advisory Group. 755 Investigations Opened Through triaging and increased capacity in our compliance and legal teams, we continue to manage a high volume of cases. Implementation of Agency and Disclosure Rules A major communications initiative informs real estate professionals about the impacts of changes to their requirements, and educates them on how to comply. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 2

the year in numbers 2018 We investigated 755 new complaints We responded to 2,388 consumer inquiries We gave practice guidance to 4,162 real estate professionals We engaged 88 key stakeholders at our first broad-based consultation event We issued 2,312 new licences to qualified applicants We held 7 hearings We inspected 255 brokerages across the province We closed 252 complaints through early resolution We received 84 tips through our newly launched Anonymous Tipline REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 3

about this report This report describes the work and activities of the past year, highlighting achievements and milestones towards delivering on the Real Estate Council of BC s mandate. It reflects the efforts and dedication of many individuals staff members, Council members, and volunteers on RECBC s committees and advisory groups who have committed their time and expertise to safeguarding the public interest in real estate transactions. All statistical information included in this Annual Report is for the nine-month period from July 1, 2017 to RECBC s new fiscal year end March 31, 2018.* *Note: Due to the change in RECBC s fiscal year, direct year-to-year comparisons are not available. who we are and what we do The Real Estate Council of BC regulates real estate professionals in the public interest. Our aim is to protect the interests of consumers in real estate transactions, and to promote high standards of professionalism and service in the industry. We do this by: licensing individuals and brokerages engaged in real estate sales, rental property management and strata management; setting and enforcing standards for entry qualifications; monitoring and maintaining standards of practice through our proactive Office and Records Inspection Program; providing resources to inform the public about real estate regulation and support consumers to make informed real estate decisions; investigating complaints against real estate licensees on behalf of the public; and disciplining licensees who have breached the Real Estate Services Act and committed professional misconduct. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 4

contents MESSAGE FROM THE CHAIR 6 MESSAGE FROM THE EXECUTIVE OFFICER 8 A NEW STRATEGIC VISION 10 OUR VALUES 11 REPORT ON ACTIVITIES 12 Enhancing Confidence through Consumer Protection 13 Building Trust by Educating and Licensing Qualified Professionals 22 Promoting Public Trust through Engagement with Consumers and Licensees 26 Fostering Service Excellence, Building Consumer Confidence 30 ABOUT RECBC 32 Governance 33 Management Team 34 Committees and Advisory Groups 35 FINANCIALS 37 Financial Review 38 Management's Report 40 Independent Auditor's Report 41 Consolidated Financial Statements 42 REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 5

MESSAGE FROM THE CHAIR Becoming a Trusted Regulatory Authority i am pleased to present to the Minister of Finance the Annual Report of the Real Estate Council of BC (RECBC). This report covers the period July 1, 2017 to March 31, 2018. We are reporting on our achievements over a nine-month period as a result of our transition to a Crown agency. RECBC has moved its fiscal year end to March 31 in order to align the organization s financial reporting with the Government s requirements for service plan reporting. This change is only one of many in a year filled with significant forward steps for RECBC. The development and launch of a renewed vision, our 2018-2021 Strategic Plan and our first Government Service Plan were key milestones in our journey to becoming more transparent and accountable to our stakeholders: the public, the professionals we license and regulate, and government. Our focus continues to be public protection: by ensuring consumers have access to resources to help them make informed decisions, and by promoting a high standard of professionalism in the real estate industry. We have already taken important steps towards these goals in our work to educate licensees and consumers about the impacts of the rules changes from the Superintendent of Real Estate effective June 15, 2018. Our transformation as a regulatory organization continues as we proceed with the implementation of the recommendations of the Independent Advisory Group. Our most recent report on the progress of the implementation coincides with this annual report, and includes REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 6

MESSAGE FROM THE CHAIR Our transformation as a regulatory organization continues, as we proceed with the implementation of the recommendations of the Independent Advisory Group. major accomplishments, such as the launch of our Anonymous Tipline, the approval of new consumer-focused disclosure forms, and changes to the requirements for continuing education to promote increased professionalism. We are committed to public protection Our commitment to promote and protect the interests of consumers in real estate transactions and to strengthen public confidence in the real estate sector remains firm. Our renewed vision and strategic goals will help us deliver on this commitment in the coming years. RECBC s vision is of empowered consumers working with trusted real estate professionals. With our renewed vision and strategic goals, RECBC is moving from being a responsive regulator to becoming a more proactive and consumer oriented organization focused on identifying emerging risks and trends. This will enable us to be a greater support and resource for consumers buying or selling property which is for most British Columbians the biggest financial decision and investment they will ever make. We are focused on regulatory excellence I want to take this opportunity to thank the staff of RECBC for their professionalism and commitment to the public interest. Erin Seeley and her team have done an excellent job of managing through a challenging year, and have accomplished significant progress towards implementing the recommendations of the Independent Advisory Group. Finally, I wish to thank my fellow Council members for their contributions over the past year and for their leadership in setting our new strategic vision. robert holmes, q.c. chair Through a steady focus on our public-service mandate, we will continue to work hard to maintain the trust of our stakeholders, including consumers, government and industry. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 7

MESSAGE FROM THE EXECUTIVE OFFICER A Milestone Year this year marks the 60th anniversary of the establishment of the Real Estate Council of BC. There is a lot of history to acknowledge, and the contributions of many people who have played key roles over the years in building, guiding and managing this organization. As we celebrate this milestone anniversary we will also be looking to the future and to how we continue to enhance our effectiveness and efficiency as a regulator. Over the course of this year we have made excellent progress in our efforts to increase our organizational transparency and accessibility, to build awareness of our services and resources, and to further develop our relationships with key stakeholders. In the years ahead we will continue to build on these efforts, and to work in partnership as a co-regulator with the Superintendent of Real Estate to administer the Real Estate Services Act and to deliver on our government mandate of public protection. Our goal is public trust In February 2018, we published a three-year Strategic Plan that will guide our work, along with a renewed vision, mission and values statements. Together with our Government Service Plan, the goals and initiatives outlined in our Strategic Plan will move us further toward our vision of public trust in ethical and competent real estate professionals, and our goal for RECBC to be seen as a trusted and valued leader in real estate regulation. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 8

MESSAGE FROM THE EXECUTIVE OFFICER The successful launch of RECBC s Anonymous Tipline marked a major milestone in our implementation of recommendations from the Independent Advisory Group. The Tipline is intended to remove barriers that may have prevented members of the public or real estate professionals from reporting suspected misconduct. From its first month of operation, the Tipline has been a success, attracting over 80 reports, many of which resulted in new investigation files. This has been accomplished during a year in which we continued to manage an increase in volumes of complaints, and to focus on increasing the capacity of our investigative and legal teams. We are investing in technology to enhance the timeliness and effectiveness of our processes. We will also continue to prioritize investing in our staff to support them in providing a high level of customer service to members of the public and real estate professionals. Preparing licensees for the implementation of rules from the Superintendent of Real Estate banning dual agency and increasing mandatory disclosures to consumers has been a large focus of our work since the rules were approved in November 2017. Thanks to the collaborative efforts of committed staff members from our legal, policy, professional standards, education and communication teams, along with the contributions of outside counsel, our education partners, advisory groups, and Council members, we have developed and distributed an array of resources to support real estate professionals as they make these important changes to their practices. Recognizing our partners I want to recognize the team at RECBC whose dedication and hard work has made the successes of the past year possible. Our staff has made great strides in accomplishing our key priorities and in implementing the recommendations of the Independent Advisory Group. The development of our Strategic Plan involved staff from across the organization working together to prioritize our goals and identify the strategies and initiatives that will enable us to meet those objectives. Thanks to the enthusiasm and collaboration of many individuals, we have a Strategic Plan that gives us a clear path forward. We could not have accomplished so much over the past year without the efforts of many committed individuals from within the industry and from other stakeholder groups, who take time from their busy lives to sit on our advisory groups, committees and panels. To all of you, thank you for your contribution to the regulation of the real estate industry. The support of our partners in Government and of our key stakeholders throughout the year has been very much appreciated. To the staff of the Office of the Superintendent of Real Estate, the Real Estate Division at the Sauder School of Business, the Professional Association of Managing Agents, the British Columbia Real Estate Association, and our other education partners, thank you for your collaborations during the planning and implementation of new consumer protection rules. And last but not least, I want to thank Robert Holmes and all the Council members of RECBC for their leadership during this time of significant change. I feel privileged to work under the direction of such a committed and engaged group of professionals, who provide strategic oversight as well as strong leadership on the Council s hearing and discipline committees. erin seeley executive officer The goals and initiatives outlined in our Strategic Plan will move us further toward our vision of public trust in ethical and competent real estate professionals. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 9

our strategic vision Over RECBC s 60-year history, we have evolved into a well-established and responsive regulator. This year, we have reviewed our strategy and made the decision to become a more proactive and consumer-focused organization. This shift will enable us to have an even greater impact for consumers and the industry over the next three years. The following strategic framework outlines our vision, overarching mission, strategic goals and priorities. VISION Public trust in ethical and competent real estate professionals MISSION RECBC protects the public interest by promoting professional standards, enhancing competency, and regulating the conduct of licensed real estate professionals in BC GOAL 1 Consumers and licensees have the information and resources they need to participate effectively in real estate transactions GOAL 2 RECBC is a trusted regulatory authority GOAL 3 RECBC fosters a culture of service excellence OBJECTIVE 1.1 Increase the availability of consumer resources to support informed real estate decisions OBJECTIVE 1.2 Increase the standard of education and resources provided to real estate licensees OBJECTIVE 2.1 Raise awareness of RECBC s mandate and strengthen relationships with stakeholders OBJECTIVE 2.2 RECBC will work with partners to identify and reduce risks to consumers OBJECTIVE 2.3 Implement those recommendations of the Independent Advisory Group Report under RECBC s responsibility OBJECTIVE 3.1 RECBC employees are engaged and motivated OBJECTIVE 3.2 Enhance the efficiency and timeliness of compliance and licensing processes REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 10

our values The Real Estate Council of BC s values are the principles that guide us in our work of delivering consumer protection to members of the public engaging in real estate transactions. We also strive to model these values in our work environment. Public Service We are dedicated to serving the public interest. Fairness We are principled, fair and accountable for our decisions. Transparency We are open and transparent; we collaborate and seek diverse perspectives. Innovative We value ongoing learning and innovation. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 11

Building Trust REPORT ON ACTIVITIES Each of RECBC s core business areas is focused on contributing to the achievement of our overarching goals and mission. Through impartially setting and enforcing standards of conduct, education, competency and licensing for real estate licensees we work to ensure that the interests of consumers who use the services of real estate licensees are adequately protected. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 12

Report on Activities ENHANCING CONFIDENCE THROUGH CONSUMER PROTECTION We take action to protect the public interest by investigating complaints, disciplining misconduct, addressing concerns and providing information and advice. Protecting the public interest is at the heart of RECBC s mandate, and our most important duty. All of our regulatory activities are guided by this overarching priority. When a consumer files a complaint about the conduct of a real estate licensee, RECBC conducts a thorough review. Any allegations that a real estate licensee may be putting consumers at risk are taken very seriously by RECBC s investigative team. If, as the result of an investigation, evidence of misconduct is confirmed, RECBC s Disciplinary Committee has the power to impose a range of disciplinary actions, including fines, suspensions and licence cancellations. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 13

ENHANCING CONFIDENCE THROUGH CONSUMER PROTECTION Actions to Promote Public Trust REMOVING BARRIERS TO REPORTING MISCONDUCT RECBC launched an Anonymous Tipline on March 15, 2018. Featuring a secure online tip form and a 1-800 hotline, the Anonymous Tipline received 84 tips in the first two weeks of operation, to March 31, 2018. We will monitor usage of the Anonymous Tipline closely, and continue to explore methods to remove barriers that may prevent individuals from reporting suspected misconduct. INCREASING INVESTMENTS IN TECHNOLOGY We are increasing our investment in data management and reporting technology to enhance our ability to monitor and assess industry practices that may place consumers at risk. REPEALING PRE-SCREENING PROCESS We have repealed the pre-screening process whereby individuals with potential suitability issues obtained an investigation and hearing before having to complete other licensing requirements. INFORMATION-SHARING WITH OTHER REGULATORS We are negotiating information-sharing agreements with other regulatory bodies and law enforcement agencies to increase our ability to address licensee misconduct. COMPLAINT REFERRALS FROM REAL ESTATE BOARDS We are coordinating with real estate boards across the province to ensure that complaints involving consumer protection issues are promptly forwarded to RECBC for review and investigation. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 14

ENHANCING CONFIDENCE THROUGH CONSUMER PROTECTION Measuring Our Progress DISTRIBUTION OF LICENSEES AND COMPLAINTS As a provincial regulator, RECBC responds to complaints from all across British Columbia about the conduct of licensed real estate professionals. INVESTIGATIONS BY SOURCE Consumer complaint 398 Licensee complaint 151 Initiated by RECBC 87 Referred from Tipline 26 Referred by another regulator 6 Referred by a real estate board 5 Other 82 Total 755 Northern BC 3.5% of Complaints 1.6% of Licensees Kootenay 2.3% of Complaints 1.5% of Licensees ANONYMOUS TIPLINE REPORTS period tips March 15 31 84 Vancouver Island & Sunshine Coast 8.7% of Complaints 10.7% of Licensees Greater Vancouver 60.5% of Complaints 59% of Licensees Fraser Valley 16.4% of Complaints 19.1% of Licensees Okanagan 8.6% of Complaints 8.1% of Licensees REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 15

ENHANCING CONFIDENCE THROUGH CONSUMER PROTECTION Brokerage Audit and Inspection Program Every year, RECBC s auditors crisscross the province, conducting inspections at hundreds of real estate brokerages to ensure that each business is taking the required steps to safeguard consumers money held in trust. During these inspections, our auditors also review transaction records to test that the brokerage and its licensees are complying with the requirements of the Real Estate Services Act, Regulation and Rules. We will conduct special audits of brokerages when we have concerns arising from the Accountant s Report that each brokerage must submit to RECBC annually, when a previous audit has uncovered issues that the brokerage must correct, or when we have received a complaint about a brokerage s business practices. When serious deficiencies are discovered during an inspection, RECBC s Legal Department is alerted. If a Discipline Hearing Committee finds that there has been a contravention of the Real Estate Services Act, Regulation or Rules, the Committee may reprimand, suspend or cancel the licences of the licensees involved. Actions to Promote Public Trust INCREASED FOCUS ON LICENSEE CONDUCT EXAMINATIONS IN BROKERAGE AUDITS We have broadened the focus of audits to include: Examining documents to ensure proper written disclosures have been made and retained. Investigating to mitigate consumer risks when issues of brokerage solvency arise. Ensuring teams of licensees are complying with all legislated requirements. RISK ANALYSIS TOOLS We are developing new risk analysis tools to help RECBC auditors identify significant risk factors during brokerage examinations. NEW AUDIT PROCEDURE We are developing new audit procedures to confirm compliance with the Superintendent s agency and disclosure rules in effect June 15, 2018. INCREASED VOLUME OF AUDITS We continue to build our audit capacity and to increase the number of brokerages we visit each year. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 16

ENHANCING CONFIDENCE THROUGH CONSUMER PROTECTION Measuring Our Progress 2018 AUDITS BY CAUSE our impacts: A Brokerage Audit Becomes a Learning Opportunity Sharon* had only been a managing broker for a few years, and she was in charge of a new brokerage. So when a Council auditor called to arrange a date for her brokerage to be inspected, she was naturally somewhat nervous. Would her brokerage be found non-compliant in some way? Would she or the brokerage possibly face discipline? Update Inspection History 92 First Year 45 New / Reinstated / Changed Managing Broker 28 Accountant s Report Concerns 24 Suspension 15 Assisting Compliance 11 Books and Records 7 Complaint / Inquiry Initiated 3 Discipline Decision Ordered 3 Other 24 Total 252 The audit took place over two days, and as Sharon had expected it was extensive and thorough. But she was relieved to discover that instead of being an ordeal, the audit helped her to understand how she could make changes in her brokerage s processes and policies to improve its ability to comply with all legislated requirements. I found "I found it an excellent worthwhile learning experience." it an excellent worthwhile learning experience, reports Sharon. The Council auditor answered all my and my accountant s questions and explained every issue or error at the brokerage diligently and patiently. Following the audit, Sharon made changes to the areas that were pointed out to her in the audit. Says Sharon, our auditor had an extraordinary knowledge and understanding of Real Estate practices, Real Estate Services Act, trading and property management, and accounting. She feels more confident now, knowing that her brokerage is fully compliant. And next time her brokerage is scheduled for an audit, she ll be looking forward to another learning opportunity with a Council auditor. *Name changed BROKERAGES IN BC Brokerages 1,099 Branch Offices 420 Sole Proprietors 34 Total 1,553 REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 17

ENHANCING CONFIDENCE THROUGH CONSUMER PROTECTION Investigations RECBC receives and investigates complaints against licensees from consumers, other licensees, local real estate boards, and other regulators or law enforcement agencies. Every complaint is carefully assessed to ensure that RECBC has jurisdiction and that there is some evidence and sufficient information to support an investigation. RECBC compliance officers contact complainants to develop a clear understanding of their complaint and to ensure that the complainant understands our investigation and discipline process and that all relevant information and documents have been provided by the complainant. RECBC compliance officers will also gather information and documents from licensees, managing brokers and other third parties. Where there does not appear to be evidence of professional misconduct, the file will be closed administratively, possibly with a letter of advisement to licensee on how to improve their practice. If the Complaints Committee is satisfied that there is no indication of professional misconduct or conduct unbecoming a licensee, the Committee will dismiss the complaint and close the file. If it appears that the licensee may have committed professional misconduct or conduct unbecoming a licensee, the Complaints Committee may recommend that the licensee receive a letter of advisement, or call for a formal disciplinary hearing. Actions to Promote Public Trust SURVEYING COMPLAINANTS We have initiated a survey of complainants and respondents to measure satisfaction levels, timeliness, and effectiveness of communications regarding the investigation and discipline process. ENHANCING INTAKE PROCESSES We are expanding our intake processes, to facilitate increased early resolution of complaints. INCREASING OUR CAPACITY We are increasing the number of compliance officers and expanding our training programs to manage investigations in a timely and efficient manner. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 18

ENHANCING CONFIDENCE THROUGH CONSUMER PROTECTION Measuring Our Progress 2018 INVESTIGATION RESULTS Complaint Dispositions: 910 No jurisdiction 156 Complaint No unfounded jurisdiction 156 98 No No evidence 97 Complaint abandoned or withdrawn 85 Informally resolved 313 Closed by Complaints Committee 13 Letter of advisement 20 Administrative penalty 2 Hearing recommended 126 82% CLOSED without Further Action 18% Referred for Further Action An investigation file may involve more than a single individual or brokerage. There may be differing resolutions for individuals named in a file. Note that files resolved in a particular period are not directly related to the complaints received during that period. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 19

ENHANCING CONFIDENCE THROUGH CONSUMER PROTECTION Disciplinary and Hearing Processes RECBC has the authority under the Real Estate Services Act to hold formal hearings. In the event that a licensee wishes to admit to the allegations against him or her, the licensee may make a proposal to settle the matter by way of consent order. Consent order proposals are reviewed by a Consent Order Review Committee, which may accept, reject, or counter the proposed consent order. Actions to Promote Public Trust PUBLISHING NOTICES OF HEARING We initiated a process for publishing notices of hearing on our website, so that members of the public can more easily attend hearings. PROCESS REVIEW We launched a comprehensive review of the complaints and discipline process, with a particular focus on increasing efficiency and timeliness of investigations, and increasing options for disposition that are proportionate to the conduct and the risks. IMPROVING THE TRANSPARENCY OF DISCIPLINARY PROCESSES AND OUTCOMES We created and published Sanction Guidelines to inform licensees and the public about the considerations involved in determining appropriate penalties for misconduct. We introduced pre-hearing conferences, to assist in the conduct of hearings, narrow issues for discipline hearings, or include discussions of potential resolution of all or part of a case. We introduced settlement conferences, in which licensees and their counsel (if any) and prosecuting counsel appear in front of a discipline committee to reach an agreement on penalty to be incorporated into a Consent Order. We created a process for disciplinary hearings on penalty to increase efficiency of hearings where liability is not in dispute, and to decrease hearing costs. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 20

ENHANCING CONFIDENCE THROUGH CONSUMER PROTECTION Measuring Our Progress LEGAL DISPOSITIONS Consent Orders 32 Letters of Advisement 20 Hearings 7 Voluntary Withdrawal 1 Total 60 DISCIPLINE ISSUED Reprimand & Discipline Penalty 32 Suspension & Discipline Penalty 9 Reprimand 6 Suspension 6 Licence Cancellation 1 Total 54 our impacts: Making a Difference for Consumers When Diane* and her husband realized that they hadn't been given important information before the purchase of their home, they weren`t sure where to turn. Learning that they had made such a large financial decision without all the information they needed was very stressful. Their first call was to RECBC's Professional Standards Advisor, who listened to their story and was able to advise them about how to file a complaint, and what to expect from the process. Diane recalls, "We submitted our complaint letter and the evidence we had. The Compliance Officer contacted us soon after our complaint was received. She addressed our queries and concerns professionally and with compassion." After investigating the matter and collecting evidence, RECBC called a hearing into the conduct of the licensee who had represented Diane and her husband. "We were contacted by a Council Lawyer who carefully walked us through the process and the various possible outcomes. She was always responsive to our questions," says Diane. "Although our complaint was initially against one individual, RECBC's investigation resulted in two other licensee conduct concerns. This was unexpected but demonstrated the detailed investigation the RECBC conducted on our behalf." Looking back, Diane feels that making the complaint to RECBC helped resolve the situation, and that the results made a difference. "What we wanted from the outcome of our complaint was that the non-disclosure would stop. As consumers, there seemed to be little hope of being able to change these behaviours. The final result was consent orders involving financial penalties. We certainly appreciate the RECBC for their assistance in this matter." *Name changed "The Compliance Officer addressed our queries and concerns professionally and with compassion." REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 21

Report on Activities BUILDING TRUST BY EDUCATING AND LICENSING QUALIFIED PROFESSIONALS Promoting regulatory compliance, consumer protection and competent real estate service through licensing education and continuing professional education. Licensing Education RECBC sets the educational requirements to qualify for licensing. Over the past year we have worked with our partners in course delivery, the University of British Columbia, Sauder School of Business Real Estate Division, the British Columbia Real Estate Association, and the Professional Association of Managing Agents, to ensure our licensing education programs continue to reflect current best practices for adult education. Students must successfully complete a pre-licensing education program mandated by RECBC and designed to equip them to understand and comply with the legislated conduct standards for licensed real estate professionals. Students who successfully complete a pre-licensing course must then pass a licensing examination. Individuals who apply for licensing to provide trading services must also complete a six-month Applied Practice Course and mentorship period, which prepares them for the realities of practice by focusing on the regulatory requirements and providing hands-on practical experience. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 22

BUILDING TRUST BY EDUCATING AND LICENSING QUALIFIED PROFESSIONALS Actions to Promote Public Trust ENGLISH LANGUAGE PROFICIENCY We introduced a higher and more comprehensive English language proficiency standard for new licensees, effective September 1, 2017. REVIEW OF LICENSING EDUCATION We commissioned a review of educational requirements including a survey of real estate licensees and initial recommendations on the competencies required for effective professional practice. DISCIPLINARY COURSE IN ETHICS EDUCATION We adopted the Real Estate Institute of Canada, REIC2600- Ethics in Business Practices Course as an additional disciplinary education course to ensure that ethics is an integral part of the licensing education continuum. Measuring Our Progress TRADING SERVICES APPLIED PRACTICE COURSE Successful Completion Residential Trading Services Applied Practice Course 1,667 Commercial Trading Services Applied Practice Course 64 TOTAL Applied Practice Course 1,731 LICENSING/SUPPLEMENTAL COURSE Examination Pass Real Estate Trading Services (RETS) 1,508 Rental Property Management Services (RPM) 157 Strata Management Services (SM) 80 Broker s Business Planning and Financial Management 64 TOTAL 1,809 REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 23

BUILDING TRUST BY EDUCATING AND LICENSING QUALIFIED PROFESSIONALS Relicensing Education Program As part of RECBC s commitment to ensuring that licensees continue to build the knowledge and skills required to comply with the requirements of the Real Estate Services Act and other legislation that may impact their practices, all licensees are required to complete mandatory continuing education. Before applying to renew their licence, each licensee must provide proof of completion of an applicable Legal Update course, which satisfies RECBC s Relicensing Education Program requirement. Actions to Promote Public Trust IMPLEMENTING CHANGES TO MANDATORY CONTINUING EDUCATION This year RECBC introduced a blended format Legal Update course, combining online and in-class components. The blended course format is designed to maximize learning and skills development. Changes included: Self-assessment to measure improved competency Required completion of new additional online component, including assessment, prior to classroom sessions Changes to course delivery and administration to improve transparency and financial oversight. Measuring Our Progress RELICENSING EDUCATION PROGRAM Successful Completion Legal Update 2017 classroom Residential 4,681 Commercial 203 Rental 81 Strata 131 Legal Update 2017 online Residential 2,224 Commercial 283 Rental 170 Strata 167 Legal Update 2018 blended Residential 329 Commercial *(first offering not held until May 2018) 0* Rental 41 Strata 92 Total 8,402 NEW MANDATORY CONTINUING EDUCATION This year, we worked in collaboration with University of British Columbia, Sauder School of Business Real Estate Divisionto develop a mandatory online education course on changes to agency and disclosure rules. We also updated content for licensing courses. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 24

BUILDING TRUST BY EDUCATING AND LICENSING QUALIFIED PROFESSIONALS Licensing Qualified Applicants Before granting a licence, RECBC reviews each applicant s credentials, including education, training and relevant experience. We require photo identification, a criminal record check and background information on the applicant s financial history to ensure that each applicant meets our Good Reputation requirements. RECBC carefully considers any investigations, disciplinary actions or practice restrictions from other regulatory bodies to ensure that only qualified, competent and ethical applicants become licensed to provide real estate services to BC consumers. Measuring Our Progress NEW LICENCES ISSUED Rental 96 Rental and Strata 13 Strata 52 Trading 2,098 Trading and Rental 50 Trading, Rental and Strata 3 Total 2,312 Licensee Demographics AGE OF LICENSEES 19-29 7% 30-39 21% 40-49 22% 50-59 24% 60-69 19% >69 7% LICENSEES BY LEVEL Associate Broker 6% Managing Broker 5% LICENSEES BY CATEGORY Representative 89% Rental 3% Rental and Strata 1% Strata 2% Trading and Rental 16% Trading, Rental, and Strata 2% Trading 76% REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 25

Report on Activities PROMOTING PUBLIC TRUST THROUGH ENGAGEMENT WITH CONSUMERS AND LICENSEES Providing timely, relevant and accurate information about real estate services to consumers and licensees is essential to RECBC s mission to protect the public interest. Our goal is to ensure that everyone can access easy-to-use information about key real estate topics. Professional Standards Advisors British Columbians look to RECBC for information and guidance to help them make informed decisions about real estate transactions. Our Professional Standards Advisors are available by phone and email to respond to questions from members of the public and real estate professionals. Professional Standards Advisors are trained staff, with years of regulatory and industry experience, who can answer enquiries from consumers and real estate professionals and provide information and support if an issue is outside of RECBC s jurisdiction or mandate. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 26

PROMOTING PUBLIC TRUST THROUGH ENGAGEMENT WITH CONSUMERS AND LICENSEES Communications Ensuring that licensees and members of the public have access to the information they need to make informed decisions when buying, selling, renting or leasing real estate is a key component of RECBC s consumer protection mandate. Increasing our capacity to provide timely and high quality information for consumers and licensees will continue to be a particular area of focus for RECBC in the coming years. Actions to Promote Public Trust LICENSEE AWARENESS CAMPAIGN Following the announcement by the Superintendent of Real Estate in November 2017 of new agency and disclosure rules to come into effect in 2018, RECBC initiated a licensee awareness campaign to prepare the industry for the changes to business practices and to ensure compliance with the new requirements. This included the development of: Videos Monthly webinars for managing brokers Monthly podcast series Weekly enewsletters FAQ resources We built a new online licensee resource platform called the Licensee Knowledge Base. Mobile friendly, with a powerful search capability, the Knowledge Base is a compendium of resources created to help licensees understand and comply with the changes to agency and disclosure rules effective June 15, 2018. INCREASING TRANSPARENCY AND ACCESS TO INFORMATION New media relations and social media policies were approved, to increase RECBC s ability to promote and protect the interest of real estate consumers. EQUIPPING CONSUMERS TO IDENTIFY, AVOID AND REPORT MISCONDUCT RECBC published three consumer advisories over the year: Aggressive Marketing Be Aware, Be Protected Homeowners Facing Foreclosure Rent-to-Own Plans IMPROVING ONLINE RESOURCES We invested in developing new online resources and channels to help licensees and consumers get the information they need. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 27

PROMOTING PUBLIC TRUST THROUGH ENGAGEMENT WITH CONSUMERS AND LICENSEES GUIDING LICENSEES RECBC supports real estate licensees by developing resources and guidelines that address key areas of practice and respond to emerging issues and topics. From newsletter articles, to online FAQs, infographics and downloadable resources, we promoted the professionalism of real estate licensees by ensuring that new information was easy to access and understand. Providing guidance on professional best practices is an ongoing priority for RECBC. When we see emerging issues, we communicate our practice advice broadly using our website, our newsletter, and through email notices to real estate licensees. Over the past year, we have provided in-depth advice on: Changes to agency requirements Conflicts of interest New disclosure requirements Managing broker responsibilities Measuring Our Progress INQUIRIES BY SOURCE channel inquiries % of inquiries Consumer 2,388 35% Licensee 4,162 61% Unknown 309 4% INQUIRIES BY CHANNEL channel inquiries % of inquiries Email 2,660 34% Phone 5,178 66% Total 7,838 100% INQUIRIES BY MONTH Jul Aug Sep Oct Nov Dec Jan Feb Mar 594 688 790 420 866 888 933 895 991 1,193 REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 28

PROMOTING PUBLIC TRUST THROUGH ENGAGEMENT WITH CONSUMERS AND LICENSEES our impacts: How Mary Navigated the Agency and Disclosure Rules Mary* is an experienced managing broker at a Vancouver brokerage. Leading up to the implementation of the Superintendent's agency and disclosure rules, she had lots of questions about how her everyday business practices would be affected after June 15, 2018. She wanted to be sure she was advising licensees at her brokerage correctly about the changes. When Mary needed guidance, or had a question that she didn't see covered in the Council's online materials, she picked up the phone or wrote an email to an advisor at the Council s Professional Standards department. Over the course of a few months, she contacted the advisor on several occasions. She continuously went above and beyond the call of duty, says Mary about the advisor she spoke with. She replied to email requests in a shorter than expected time, always tried to give simply understood replies so we can understand what the new rules and regulations mean, and how to interpret and apply them to our real life everyday business. "She continuously went above and beyond the call of duty." Mary also took advantage of the Council's resources for managing brokers including videos, webinars and podcasts to gain a better understanding of the agency and disclosure rules. The podcasts and information sessions have been very informative and helpful, says Mary. She has done everything in her power to help everyone have an understanding of what is required of our industry. When June 15 arrived, Mary felt prepared for the changes, and able to give licensees at her brokerage the guidance they needed to comply with the new rules. *Name changed REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 29

Report on Activities FOSTERING SERVICE EXCELLENCE, BUILDING CONSUMER CONFIDENCE Maintaining and improving our organizational capacity is key to accomplishing our goals for public protection. We are focusing on improvements to our processes, in order to support our team members to do their jobs effectively, and to continue to increase our efficiency. Actions to Promote Public Trust BUILDING A HEALTHY WORKPLACE ENVIRONMENT AND CULTURE Developed Request for Proposals to undertake office renovation to more efficiently use office space and provide additional workspace to support organizational growth Updated employee benefits (personal days, sick leave, maternity) Instituted flexible work policy to support work-life balance Provided staff with new support services, including employee assistance program ENHANCING EMPLOYEE RECRUITMENT AND RETENTION Building in-house human resources capacity External total compensation review conducted to review market competitiveness New total compensation policies and structure implemented to support RECBC s mission, values and strategy REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 30

FOSTERING SERVICE EXCELLENCE, BUILDING CONSUMER CONFIDENCE PROCESS IMPROVEMENTS AND TOOLS External review of licensing database system conducted, with recommendations to meet current and anticipated future business requirements Needs assessment for expanded case management system Development of a strategic IT plan to support organizational strategic goals Measuring Our Progress OUR PEOPLE We are committed to investing in our employees, in order to continue providing services to protect real estate consumers. Communications 4 2 Human Resources FOCUSING ON LEADERSHIP Staff engagement in development of Strategic Plan Held regular meetings with staff to facilitate discussion on organizational priorities and new developments 12 IT 1 Audit & Accounting 14 Education & Licensing 23 2 Executive Office Compliance & Legal REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 31

Building Trust ABOUT RECBC The Real Estate Council of British Columbia is a Crown agency established to protect real estate consumers and ensure a high standard of professionalism in the real estate industry. Governed by publicly-appointed Council members, RECBC is accountable to government for safeguarding the public interest by enforcing standards of conduct for real estate licensees under the Real Estate Services Act. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 32

ABOUT RECBC Governance The Real Estate Council of BC is comprised of up to 16 members appointed by the Lieutenant Governor in Council. Both the Chair and Vice Chair of Council are appointed to their positions by the Lieutenant Governor. The role of the Real Estate Council of BC and its authority and powers are set out in the Real Estate Services Act, the Regulation, and the Bylaws made under the Act. The appointment of Council members by government protects real estate consumers and safeguards the public interest, by ensuring that RECBC benefits from a diversity of perspectives on regulatory and governance best practices, along with industry expertise. Council Members Robert Holmes, Q.C. Chair Robert Gialloreto Vice Chair John Lawrence Daly Sandra Lynn Heath Len Hrycan Kevin Peter Lonsdale Gerald Lawrence Martin Elana Valerie Mignosa Sukhmander S. Sidhu Laurie Marie Sterritt William Thomas Styffe Maili Wong standing, left to right: Sukhmander Sidhu, Thomas Styffe, Elana Mignosa, John Daly, Erin Seeley, Gerry Martin, Rob Gialloreto seated, left to right: Kevin Lonsdale, Laurie Sterritt, Robert Holmes, Len Hrycan, Maili Wong Absent: Sandra Heath REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 33

ABOUT RECBC Management Team RECBC s management and performance are the responsibility of the Executive Officer in accordance with the policies and budget established by Council. The management team and staff support the Executive Officer in the delivery of programs and services for consumers and licensees. Leadership Team Erin Seeley Executive Officer Geoff Thiele Director, Legal Services Lisa Holst Director, Accounting & Audit Pam Skinner Director of Education & Licensing (as of April 16, 2018) Managers Bernice Gordon Manager, Human Resources Caroline Allen Manager, Licensing Education Debbie Morreau IT Manager/Business Analyst Lisa Kern Senior Supervisor, Licensing Marilee Peters Manager, Communications Maureen Coleman Manager, Professional Standards Michael Scott Manager, Compliance (as of April 30, 2018) standing, left to right: Bernice Gordon, Caroline Allen, Geoff Thiele, Marilee Peters, Michael Scott, Lisa Kern, Maureen Coleman, Debbie Morreau seated, left to right: Erin Seeley, Pam Skinner Absent: Lisa Holst REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 34

ABOUT RECBC Committees and Advisory Groups Committees are established in the Bylaws. Guided by approved terms of reference, these committees report to RECBC on regulatory, governance and policy matters. Committees may include both Council members and non-council member representation. Advisory Groups assist in maintaining communication, cooperation, and an exchange of information between RECBC, real estate industry professionals and other stakeholder groups. Complaints Committee The Complaints Committee orders hearings to determine whether a licensee has committed professional misconduct or conduct unbecoming a licensee, pursuant to section 35 of the Real Estate Services Act. The committee is made up of a combination of Council members and industry professionals, chaired by a Council member. Since July 1, 2017 the following industry professionals have participated on Complaints Committees along with Council members: Bradley Fenton Dennis Fimrite Carol Geurts Katie Khoo Marylou Leslie Sue Lynch Dave Peerless Andrew Seaton Jennifer Lynch Randy Wong Education and Licensing Committee The Education and Licensing Committee considers educational exemption requests, and researches and reports on issues affecting education and licensing. Robert Holmes Ex-Officio, Council Chair Gerry Martin Committee Chair, Council Member Sandra Heath Council Member Sukh Sidhu Council Member Tom Styffe Council Member Dave Peerless Industry Representative Erin Seeley Executive Officer Caroline Allen Staff Liaison Consent Order Review Committee The Consent Order Review Committee ensures that consent orders result in fair and appropriate decisions, and either accepts, varies or rejects penalty recommendations. The committee is made up of a combination of Council members and industry professionals. Since July 1, 2017 the following individuals have participated on Consent Order Review Committees along with Council members: Andrew Leong Lindsay Lyster Thelma O`Grady Finance and Audit Committee The Finance and Audit Committee oversees the budget, financial reporting and management obligations of RECBC, identifying education and training for Council members, and providing advice to assist RECBC in meeting its fiduciary responsibilities. Robert Holmes Ex-Officio, Council Chair Kevin Lonsdale Committee Chair, Council Member Elana Mignosa Council Member Maili Wong Council Member Erin Seeley Executive Officer Lisa Holst Staff Liaison REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 35

ABOUT RECBC COMMITTEES AND ADVISORY GROUPS Governance Committee The Governance Committee assesses the governance practices and policies of RECBC, and makes recommendations on these matters. Robert Holmes Ex-Officio, Council Chair Rob Gialloreto Committee Chair, Council Vice-Chair John Daly Council Member Len Hrycan Council Member Laurie Sterritt Council Member Erin Seeley Executive Officer Geoff Thiele Staff Liaison Policy and Legislative Consultation Committee The Policy and Legislative Consultation Committee provides input and advice on legislative and policy matters, including proposed or potential changes to the Act, or regulations, rules or bylaws made under the Act, and related RECBC policies and procedures. Robert Holmes Ex-Officio, Council Chair Rob Gialloreto Council Vice Chair Gerry Martin Council Member Bruce Woolley, QC Public Representative David Peerless Industry Representative Geoff Thiele Staff Liaison Jen Millerd Staff Liaison Strata Management Services Advisory Group The Strata Management Services Advisory Group is a forum for industry and public representatives to bring concerns and/or recommendations concerning strata management issues to RECBC. Tom Styffe Council Member Tanya Millage Industry Representative Tony Gioventu Public Representative Adrienne Murray Public Representative Cory Pettersen Industry Representative Matt Wallin Industry Representative Shannon Mather Office of the Superintendent of Real Estate Alex Longson Staff Liaison Trading Services Advisory Group The Trading Services Advisory Group is a forum for industry and public representatives to bring concerns and/or recommendations regarding residential trading services to RECBC. Sukh Sidhu Council Member Marty Douglas Industry Representative Susan Lynch Industry Representative Andrew Leong Industry Representative David Peerless Industry Representative Jean Whittow Public Representative Thomas Taller Office of the Superintendent of Real Estate Maureen Coleman Staff Liaison REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 36

Financial Statements March 31, 2018 RECBC s financial statements are prepared in accordance with Canadian Public Sector Accounting Standards. Each year external auditors conduct an independent examination in accordance with Canadian auditing standards. REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 37

Financial Review as at June 30th, 2018 this financial review is based on the audited consolidated financial statements for the 9 months ending March 31, 2018 and the comparative figures for the year ended June 30, 2017 which are restated to ensure compliance with public sector accounting standards. RECBC has aligned its financial reporting with Government Service Plan requirements and a March 31 fiscal year end. Overview General operations are funded predominantly by revenues from licensing and assessment fees required under RECBC Bylaws under the Real Estate Services Act. The fees collected are for a two year period in advance and are recognized as income in the period received. Deferred revenue is recognized on the effective date of the licence. Other sources of revenue include application fees, course fees, discipline penalties, investment income, and a return of surplus funds from the Applied Practice Course from the British Columbia Real Estate Association. Receipts for discipline penalties may only be expended by RECBC for the purpose of education of the public, licensees and other participants in the real estate industry in BC about the operation and regulation of the industry and issues related to real estate and real estate services. These funds are held in trust and segregated from general operating funds. Operations General and Education Funds revenues Total revenues for the 9 months ending March 31, 2018 are $6,666,681, a decrease of $2,814,838 from fiscal 2017 of $9,481,519. Recognized REAL ESTATE COUNCIL OF BRITISH COLUMBIA ANNUAL REPORT 2018 38