UPDATE 1-British Columbia real estate panel urges tougher fines, oversight

(Adds comment from the advisory group chair, additional
information on recommendations)
By Julie Gordon
VANCOUVER, June 28 (Reuters) - British Columbia's real
estate agents and brokerages should be fined dramatically more
than they currently are for misconduct and face more stringent
regulatory oversight, an advisory board recommended on Tuesday.
The final report by the provincially appointed Independent
Advisory Group follows a four-month review of the sector, which
has come under scrutiny after media reports of predatory
practices by some agents and brokers in red hot markets.
Housing prices have skyrocketed in British Columbia, jumping
30 percent in Greater Vancouver over the last year, prompting
concerns that speculators and foreign investors are driving the
market rather than local housing needs, and posing regulatory
challenges.
"The regulatory regime for real estate was designed for
people who buy and sell homes, not people who are buying and
selling investments," advisory group chair Carolyn Rogers told
reporters. "That is a different market, it requires different
regulatory rules, approaches and power."
That shift drove the group to urge numerous changes to
strengthen the Real Estate Council of British Columbia's
oversight of the industry, including ensuring that the Council
is the only body responsible for investigating misconduct.
There was previously some confusion as to whether regional
real estate boards, which are industry groups, or the
provincially appointed Council was the de facto regulator.
But the most striking of 28 recommendations was that maximum
penalties levied by for misconduct by individual licensees be
boosted C$250,000 ($191,703) from a current C$10,000, and to
C$500,000 from C$20,000 for brokerages. It also recommended
raising maximum administrative penalties to C$50,000 from
C$1,000.
"Large commissions and low penalties for licensee misconduct
combine to create the perception that regulatory penalties are
simply a transaction costs for otherwise profitable behavior,"
the advisor group said in its report. "This significantly
undermines the effectiveness and credibility of the regulator."
The report also recommended that agents no longer be able to
represent both buyer and seller in a transaction, and that they
be prohibited from having a financial interest in a transaction,
beyond getting a commission.
Seven of the recommendations, including changes to monetary
penalties, are subject to approval by the British Columbia
government. The remainder will be implemented by the Real Estate
Council, which has accepted the recommendations.
The advisory group said it does not expect the stricter
rules to have a material impact on scorching real estate markets
in the province or housing affordability, noting the focus was
on rebuilding consumer trust.
($1 = 1.3041 Canadian dollars)