RECOrdF O R T H E

RECOrdPUBLISHED BY THE REAL ESTATE COUNCIL OF ONTARIO • WINTER 2016

NEW REGISTRAR’S BULLETINS TACKLE

COMMISSIONS AND REFERRAL FEES

WE ASKED,

WE HEARD YOU,

AND WE’RE

TAKING ACTION.

RECO IS ‘RENOVATING’

HOW WE OPERATE

2 W I N T E R 2 0 1 6

MESSAGE FROM THE CHAIR RECO BOARD OF DIRECTORS

By Jody Lavoie, Chair, RECO Board of Directors

GOOD THINGS HAPPEN WHEN WE TALK TO REGISTRANTSOn behalf of everyone at RECO, I’d like

to wish all of you a happy new year.

It’s a time when people often look back

at the year that was, and look forward

to changes in the year ahead.

Looking back on 2015, we had an

open conversation with brokers,

salespeople and industry leaders about

how they see RECO and what we

can do better. As a result of those

conversations, we’re making significant

changes to how we operate. Looking

forward to the coming year, registrants

will start to see the impact of these

improvements.

The theme of this newsletter is:

We asked, we heard you, and we’re

taking action.

But first, let me step back and tell you

why reaching out to registrants like

you was so important.

WORKING TOGETHERWhat do chattels, bidding wars,

and basement apartments have in

common? They’re three key issues that

buyers often deal with, and in each

case RECO uses them to highlight how

a registered real estate professional

can help.

RECO works to protect the public

interest and enhance consumer

confidence in the real estate

profession, but we can’t do that

without you. Brokers and salespeople

like you are on the ground, day in

and day out, helping buyers and

sellers navigate a complex real estate

environment. RECO and the real

estate sector need to work together

to ensure consumers are given the

best possible advice and service.

It’s RECO’s role to help registrants do

that by encouraging you to follow

leading practices, ensuring that you

are well-equipped to meet the needs

of your clients. And, when necessary,

it’s our role to use the complaints and

inspections processes to make sure the

rules are followed.

A well-regulated real estate sector

increases consumer trust, and that’s a

positive outcome for everyone. That’s

why we turned to you for advice on

how RECO can work better with you

to meet our common objectives.

TAKING ACTIONThis newsletter is focused on those

conversations, as well as the important

changes that we’re making based on

what we’ve heard.

The changes fall into four categories:

• More clarity when we communicate

about the rules;

• Changes to the RECO complaints

process;

• Improved customer service; and,

• Increased consultation with the pro-

fession through an advisory council.

It’s important to note that there is much

that RECO does well, and we want to

build on that success. Think of it like

a renovation—we’re keeping the best

parts of the house, and improving the

areas that need some attention.

This doesn’t mark the end of our

consultation with you. We want to

keep the conversation going through

the advisory council, webinars with

industry leaders, local events and our

recently-completed registrant survey.

I hope you’ll agree that these changes

will have a positive impact on the real

estate profession.

MESSAGE FROM THE CHAIR RECO BOARD OF DIRECTORS

COMPLAINTS AND INSPECTIONS SURVEYSJANUARY TO SEPTEMBER 2015

103 people who fi led complaints

175 registrants subject of a complaint

302 registrants subject of an inspection

Asked about:

• Staff professionalism and knowledge;

• Information they received in letters and via website;

• Perceived fairness of the process;

• Timeliness of the process; and,

• Overall satisfaction with the process.

Complaints and inspections surveys are ongoing so

that we can measure changes over time.

WE ASKED HERE’S HOW WE REACHED OUT TO REGISTRANTS

Less than two years

2-5 years

6-10 years

11-15 years

16-20 years

21-25 years

More than 25 years

35%

5%17%

22%

8%

3%

10%

YEARS OFEXPERIENCE

FORQUESTIONNAIRERESPONDENTS

one-on-one phone interviews with

Brokers of Record, industry leaders,

and executive offi cers at real estate

boards

PHASE TWO - QUESTIONNAIRE TO CONFIRM AND EXPAND WHAT WE HEARDSample representative of the industry. Included:

• Varying levels of experience (see chart below);

• Salespeople and brokers; and,

• Registrants on residential and commercial side.

registrants in electronic

discussion groups

PHASE ONE - FREE FORM DISCUSSION

49

40

REGISTRANT OUTREACH• Conducted by The Portage Group.

• Portage provided expertise with gathering this type

of information and acted as a neutral third-party.

4 W I N T E R 2 0 1 6

HOW REGISTRANTS SEE RECO

When you think of RECO does the image of a

school principal come to mind? Research

participants were asked to list three words to

describe RECO. The word to the right shows

the top 25 words that survey respondents used

to describe RECO. The larger words show the

responses that were more common. Much like

a school principal, many registrants see RECO

as knowledgeable, professional and fair.

HEARDYOU

WE

By consulting with registrants and industry leaders, we were able to gain valuable insights into how RECO is seen within the sector, what we are doing well, and where we can make improvements.

5 W I N T E R 2 0 1 6

WHAT RECO IS DOING WELL

Understanding RECO’s role

Registrants have a high understanding of RECO’s role in

enforcing the Code of Ethics and real estate regulations.

There is also a fairly high understanding that RECO’s role

includes protecting and educating the public, but we would

like it to be higher. As a regulator, taking care of

the public is essential to our mandate.

There is confusion about who is responsible for developing

real estate legislation. To be clear – the Ontario government

does it. RECO’s job is to enforce legislation, not write it.

Registrants were evenly split on whether it is RECO’s role to

promote professionalism.

“At RECO, we 100 per cent believe professionalism is integral

to our role,” said CEO Kate Murray. “That said, we fully

agree it is a mission that we share with our colleagues at

local boards, as well as the Canadian Real Estate Association

and Ontario Real Estate Association.” HEARD

“ At RECO, we 100 per cent believe professionalism is integralto our role,” said CEO Kate Murray.

RECO Provincial Government Real Estate Associations Other

RECO MANDATED ROLES %

OTHER SECTOR ROLES %

81 4 14 1

77 8 14 1

81 3 20

67 21 11 1

48 9 39 4

46 1 51 2

74 7 19

50 2 46 2

45 40 15 1

38 3 58 2

14 1 81 4

ENFORCING THE CODE OF ETHICS

ENFORCING REAL ESTATE REGULATIONS

LICENSING REAL ESTATE PROFESSIONALS

PROTECTION OF THE CONSUMER

EDUCATING THE CONSUMER

PROVIDING CONTINUING EDUCATION TO REGISTERED REAL ESTATE PROFESSIONS

ESTABLISHING A CODE OF ETHICS

PROMOTING PROFESSIONALISM

DEVELOPING REAL ESTATE LEGISLATION

PROMOTING THE USE OF REGISTERED REAL ESTATE PROFESSIONALS

OPERATING THE MLS®

7 W I N T E R 2 0 1 5

Impact on the profession

The research also indicated that most registrants believe there is value in being part of a

regulated profession:

• 94 per cent strongly agree or somewhat agree that regulating the real estate profession

can provide great value for registrants.

• 96 per cent strongly agree or somewhat agree that regulation can provide great

value to consumers.

“ It’s encouraging that many registrants see the benefi t of being part of a regulated

profession,”said Registrar Joseph Richer.“Not only does enforcement ensure that the rules

are being followed, but it fosters a sense of trust among home buyers and sellers because

they know real estate professionals are held to a high standard.”

The survey also went a little deeper, asking not just about regulation in general, but about RECO’s role,

and to what degree it had a positive or negative impact on the profession (with 7 indicating the most

positive and 1 being the most negative) .

The average response was 4.4 and while this isn’t bad, it isn’t great either.

“ Basically, some registrants are telling us that we can improve how we operate,”

said Richer. “That’s something that we have taken to heart.”

Worst Case Average response: 4.4 Best Case

1 2 3 4 5 6 7Negative Positive

RECO’s role in regulating the profession has a positive/negative impact on the profession and my career

7 W I N T E R 2 0 1 6

Very satisfi ed: 83.5%

Satisfi ed: 13.8%

Not satisfi ed: 2.7%

High satisfaction with theinspections process

Last year, RECO performed close to 1,000

inspections of brokerages across Ontario to

make sure they are following the rules. The

survey clearly shows registrants agree that

one-on-one contact is a good opportunity for

Brokers of Record to ask questions and confi rm

they are maintaining accurate records.

Recent improvements to communications recognized

Recently, RECO has ramped up its communications efforts with registrants and industry stakeholders

through improved e-blasts and newsletters, and through more face-to-face interaction at local events.

The positive feedback is encouraging, and we’ll continue building on the strong foundation that

already exists with registrant communications.

AREAS FOR IMPROVEMENTWhen we reached out, we weren’t just looking for the “good news.” We wanted to hear about the areas where we could do better. Read on to learn about the areas registrants identifi ed for improvement, and how RECO istaking action in response to their feedback.

OVERALL SATISFACTION

WITH THE INSPECTIONS

PROCESS

“ It’s encouraging that many registrantssee the benefi t of being part of a regulated profession,” said Registrar Joseph Richer.

Worst Case Average response: 4.4 Best Case

Positive

8 W I N T E R 2 0 1 6

ACTIONWe’re

When we reached out to registrants, they gave us some key insights into how we can do better. Here’s what we heard, and how we’re taking action.

Taking

9 W I N T E R 2 0 1 6

RECO is taking a more educational approach to common discipline issues so that registrants can better understand how to avoid problems in the future. Here are three things that we’re doing:

Practice advisories

We are going to begin issuing practice

advisories that provide registrants with

a practical interpretation of the Code

of Ethics.

Reviewing ads before they run

We’re also changing how we handle

advertising compliance.

In response to a common request, we

will now review ads before they run.

Here’s how it will work:

- If a registrant thinks there may

be compliance problem with an

advertisement, they must first run

it by their broker of record;

- If the Broker of Record is unsure,

the BoR can send it RECO;

- RECO will review the ad and send

back a checklist showing where

there may be a mistake;

- The registrant can then correct the

mistake and issue the compliant

advertisement.

We formally launched this service in

early 2016.

Higher accountability for

ad complaints

In addition, if a registrant has a

complaint about other registrants’

advertisements, it must be submitted

by your Broker of Record. If you are the

subject of an advertising complaint,

your Broker of Record will have to

respond.

We believe that increasing the level

of accountability within brokerages

will help solve most of the advertising

compliance problems. We will

encourage Brokers of Record to

discuss their concerns with each other

first to try to resolve the issue before

submitting a complaint to RECO.

MAKING THE RULES MORE CLEAR

“ Registrants feel there is room to improve when it comes to the support RECO provides when they have questions around compliance.” – Portage final report.

If you are the subject of an advertising complaint, your Broker of Record will have to respond.

1 0 W I N T E R 2 0 1 6

Seventy-five per cent of registrants

who have been the subject of a com-

plaint are satisfied or very satisfied with

RECO’s complaints process. That means

about one quarter are not satisfied.

These responses were unrelated to the

outcome of the complaint – it was

simply about the process itself. So we

are working to make the process better.

Improved communicationWe are:- Updating our website and com-

plaints brochure to make informa-

tion about the process and

possible outcomes more clear;

- Revising the language in letters

and emails to complainants and

respondents to make it more

informational and educational;

- Providing registrants with the

information they need so that

the process is transparent and

they can provide an informed

response; and

- Making sure that all parties feel

that they have the opportunity to

present their side of the story.

CHANGES TO COMPLAINTS PROCESSES“ Many would like to see stronger repercussions for those truly doing ‘wrong’ and more support for those who have simply made a mistake or have made a minor infraction.” – Portage final report.

Expanding our use of dispute resolution (often referred to as mediation)Dispute resolution for complaints of a

less serious nature has two key benefits:

1. The focus is on resolving the

problem through mutual agreement,

rather than discipline or punishment;

and,

2. The complaint is resolved more

quickly, with less administrative

effort for all parties involved.

So we’ve expanded the criteria for a

complaint to qualify as long as the

parties agree to it.

We have also expanded the possible

outcomes. If the complaint doesn’t

warrant disciplinary action, we want

to find an outcome that works for

the parties.

Quite often, the parties recognize the

error that has been made and see the

value in making certain the registrant

takes steps to prevent it from happen-

ing again. An apology can make a big

difference when we’re helping them

reach an agreement.

Progressive disciplineRECO is committed to “progressive

discipline.” We want to give registrants

an opportunity to learn from their first

mistake, while still safeguarding the

consumer. Where inappropriate con-

duct is repeated, we will increase the

penalties we will be seeking.

Of course, we will continue to handle

serious complaints with major penalties.

“ An apology can make a big difference when we’re helping parties reach an agreement.”

1 1 W I N T E R 2 0 1 61 0 W I N T E R 2 0 1 6

IMPROVING CUSTOMER SERVICE“ Key concerns revolve around inconsistency in response to inquiries, and

a lack of timely responsiveness to inquiries and processing of registrations, renewals, transfers etc.” – Portage fi nal report

We want to make sure our

talented staff are able to do their

jobs effectively, so we are providing

them with more customer service

training, as well as new tools that

will help ensure that we provide

consistent information.

One issue we have to tackle is the

multiple entry points registrants

face when they want to ask us a

question, whether it be about

compliance, education or

registration. Registrants shouldn’t

have to worry about which

department they need to fi nd

or which email address to use.

So, we are reviewing our internal

processes so that registrants

reach the right person to answer

their question in a fast and

straightforward way.

RECO is also launching an online

“consumer toolkit” that will contain

materials registrants can share with

their clients to help them understand

the benefi ts of working with a

registered real estate professional.

INDUSTRY ADVISORY GROUP“ There is a sense from some registrants that RECOoperates in an ‘ivory tower’ where policies and procedures are developed without suffi cient regard for the realities registrants face ‘in the trenches’.” – Portage fi nal report

CHANGES TO COMPLAINTS PROCESSES

We need to make sure RECO’s

policies refl ect the day-to-day

realities of registrants. And, we have

the perfect pool of expertise to help

us: real estate professionals who

have a lot of practical experience

and knowledge of the real estate

marketplace.

To tap into that expertise, we are

creating an advisory group of

industry representatives that we can

consult when we are considering

our approach to different issues.

This group will have representation

from regions across Ontario.

THIS IS JUST THE STARTWe want to keep the

conversation going–through

the advisory council, by

hosting more webinars and

with our registrant survey.

That way, we will be able to

see how these changes

are being received and

identify areas for further

improvement.

WE ASKED,

WE HEARD YOU,

AND WE’RE

TAKING ACTION.

RECO IS ‘RENOVATING’

HOW WE OPERATE

Do you have questions about referral

fees? Are you thinking about offering

clients a commission rebate or reduc-

tion? New Registrar’s Bulletins tell you

what you need to know about these

issues.

To fi nd them, visit www.reco.on.ca and

navigate to Real Estate Professionals >

Resources > Registrar’s Bulletins

Commission reduction agreements

can be an asset when you’re trying to

facilitate a transaction. This bulletin will

help you understand how to handle a

commission reduction while complying

with the regulations.

Commission rebates to clients and

customers are a legitimate marketing

tool, and a way to differentiate yourself

in the marketplace. This bulletin will

help you ensure that the promotion,

documentation and delivery of a rebate

complies with the regulations.

Referral fees are something registrants

often ask us about. For example,

can you pay referral fees to a non-

registrant? What are your disclosure

obligations when receiving a referral fee

from a mortgage broker? This bulletin

spells out when you pay a referral fee

to a third party or receive a referral fee

from a third party.

New Registrar’s Bulletins tackle commissions and referral fees

Real Estate Council of Ontario

3300 Bloor Street West

Suite 1200, West Tower

Toronto, Ontario M8X 2X2

Tel: 416-207-4800

Toll-Free: 1-800-245-6910

Fax: 416-207-4820

Do you have any comments or inquiries about For the RECOrd

newsletter? Please send them to: communications@reco.on.ca

Disclaimer: While RECO makes every effort to ensure that the information in this publication is current and accurate, RECO does not warrant or guarantee that it will be free of errors. The information contained in this publication is not intended to cover all situations. It is general information only and users/readers are encouraged to seek their own independent advice for particular fact situations.