The future of the Real Estate Council of Alberta, the province’s regulatory body for the industry, is under review as the government considers a scathing independent report on the organization’s governance and activities.
Earlier this year, prompted by complaints from the real estate industry, Service Alberta tasked KPMG to produce the report. It concluded that “the Council is not governing RECA effectively, and that personality conflicts within Council, and between Council and Administration, are unlikely to be resolved without changing the individuals involved. Council has spent considerable resources attempting to improve its governance with minimal effect.”
The report, entitled Governance Review of the Real Estate Council of Alberta, also said, “It would appear that the most effective and timely way to resolve Council’s governance challenges would be to dismiss all Council members. There are too many issues with the current composition and operations of Council to enable an effective governance body.”
Nate Glubish, Service Alberta Minister, says the review was held because over the past couple of years the provincial department has received numerous complaints from real estate industry stakeholders about the governance performance of RECA.
“I think the most significant takeaway from the report is it really just demonstrates how dysfunctional the Real Estate Council of Alberta is and it goes into good detail to document that,” he said. “It’s clear that industry has lost confidence in the Real Estate Council and quite frankly so have I in terms of the Council’s ability to fulfill its purpose of regulating the real estate industry.”
Glubish says the government is “carefully considering what if any next steps may arise from this report’s recommendations. Right now would be premature to speculate on specifics. Given the gravity of the report, I don’t want to rush into anything.
“We’ve taken a couple of actions to provide instruction to RECA based on the report. To this date, they have complied with those directions. We’re grateful for their compliance and we will continue to work with them to ensure that compliance is met.”
In early August, Glubish told RECA that its proposed changes to business signage requirements, as well as any other policy, bylaw or regulatory changes, must first pass through his office.
“Our government has a mandate to cut red tape that creates unnecessary burdens for Albertans in their personal and business lives, and we are working hard to make sure Alberta is open for business and free of unwarranted red tape,” said Glubish in making the announcement. “That’s why I was so frustrated to see a government agency trying to dictate font size and logo placement to private-sector business, a change that would not have provided any benefit or service improvement to Albertans buying or selling their homes, while increasing costs to hard-working Albertans.
“We know that in recent years, Alberta has seen the amount of red tape grow, causing the province to earn failing grades from our partners in the fight to prevent mounting costs on businesses due to unnecessary changes in government regulation. In a time when we are actively working with the public, with businesses, and with different levels of government to reduce regulatory burdens, it is unacceptable that RECA would take steps toward implementing new red tape.”
RECA is embroiled in ongoing litigation with one of its council members, Robyn Moser, a Realtor in Calgary who was appointed to the council by the Alberta Real Estate Association. RECA filed an application to have Moser removed from council, claiming a violation of conflict of interest provisions in the Real Estate Act.
“Council members claim that Council spends a disproportionate amount of time discussing governance matters, including internal conflicts such as the lawsuit against one Council member,” said the KPMG report. “Approximately 80 per cent of the motions brought to Council over the last three years pertain to administrative or governance issues, in comparison to 20 per cent of decisions pertaining to strategic or regulatory matters.”
Moser told REM she could not comment on the issue due to the ongoing litigation.
RECA’s first and only executive director, Bob Myroniuk, retired at the end of August after 23 years. Joseph Fernandez, the director of education programs, is currently the acting executive director. A Service Alberta spokesperson says “the search is ongoing and recommendations have been sought” for a new executive director.
RECA did not give interviews on the controversy but directed REM to two public statements it has issued in the past.
Regarding the August Ministerial Order, Robert Telford, chair of RECA, said: “As the independent governing authority for Alberta’s real estate industry, consumer protection is at the core of our mandate. We will work diligently and co-operatively with the minister to ensure compliance with the Ministerial Order and are committed to providing updates to industry members and stakeholders as they become available.”
RECA said it remains fully committed to transparency and openness and “we thank the Government of Alberta for working with us to ensure the ongoing integrity of the industry and protection of consumers.”
Regarding the KPMG report, the Chair’s Message in an August newsletter said: “I want to be clear; this report deals with the work of RECA Council Members, and not RECA Administration. The other side of the overall review, the operational review, is currently under development and has no release date at this time. The major findings of the governance report include significant interpersonal conflict amongst Council and Administration, Council not focused on strategic issues, Council not having a constructive relationship with industry associations, Council not exercising adequate oversight of RECA, and minimal public representation on Council – one industry association has the ability to control the majority of Council member appointments, and that contributes to the other governance challenges.
“Council will work co-operatively with Service Alberta as the Minister decides what, if any, recommendations he will advance.
“RECA will keep all stakeholders informed, immediately, upon any further developments stemming from this review.”
Brad Mitchell, CEO of the Alberta Real Estate Association says the association is calling on council to take the findings of the KPMG report seriously and to fully explore its implications – holding itself and its administration accountable for their respective actions.
“It is encouraging to see the minister take note of industry concerns around RECA’s rogue administration, its regulatory overreach and its lack of accountability to stakeholders and government,” says Mitchell. “AREA will continue to advocate for an accountable, open and transparent regulator, who protects the public interest.”
Alan Tennant, CEO of the Calgary Real Estate Board, says the industry has a lot to learn from the KPMG report.
“It’s a very strongly worded report. There’s some very specific areas that are explored and it’s one that we’re still digesting,” says Tennant. “(We’re) certainly trying to position ourselves as being part of the solution going forward and we’ve always worked hard to make sure that our members understand different parts of the Real Estate Act that affect them.
“A good full-functioning regulatory environment is really important. There is going to be a reset going forward and we see ourselves as being a big part of that. This report certainly suggests that change is in the air and we do have a new provincial government and they have been on record as having concerns about agencies, boards and commissions and how they operate,” says Tennant. “This is an area of great concern to us. We want to ensure the evolution of our regulatory environment to an updated model.”
RECA is a government agency and reports to Service Alberta. Council is composed of 12 council members, representing residential and commercial real estate, property management, mortgage brokerage, real estate appraisal and the public.
Council members adhere to a Code of Conduct. Their responsibilities include determining, setting and enforcing standards of conduct and business practices for industry professionals, providing services that enhance and improve the industry, and administering the Real Estate Act, bylaws and rules. The administrative staff, led by the executive director, assists council in fulfilling its duties. Council members are appointed for three-year terms and can serve two terms consecutively.