Scalable Enforcement

Imagine how confusing it might be for a newly drafted, rookie hockey player hitting the ice for his first NHL practice, when he makes some beginner mistakes, gets a little hot under the collar, and the coach benches him for the next five games. No warning. No attempt to correct the action, simply sent for an early shower and benched.

Contrast that with a rookie player who does something wrong at practice, gets a little hot-tempered, and is given a warning by the coach, with suggestions on how the behaviour can be corrected. The next time he does the same thing at a practice, the punishment is a bit more severe. Finally, on the third (or maybe the fourth) time the player acts out in the same way, he is benched for a bunch of games.

The second player in the above scenarios is likely going to have a better understanding of what he has done wrong. That’s not to say he won’t do the same thing again – but he will likely have a better idea of how his misplay at practice could have been avoided and why it should have been avoided.

The Real Estate Council of Alberta (RECA) has adopted a scalable enforcement policy that takes a similar approach for breaches of the Real Estate Act and Rules. The point being that, through such a policy, industry professionals, when in breach of the Act or Rules, will receive sanction that can and will escalate upon future occurrences of the same activity.

One possible progression of sanction under a policy of scalable enforcement would be:

• An Advisory Note: Though not technically a form of sanction, an industry professional may receive an Advisory Note to assist them in taking corrective action. These are sometimes issued when information has been brought to RECA’s attention without a formal complaint (for example, a minor advertising infraction). Advisory Notes are educational in nature and provide industry professionals with guidance on what steps they can take to ensure they do not end up with disciplinary action in the future.
• Letter of Reprimand: A Letter of Reprimand may be issued to an industry professional who has received an Advisory Note in the past or they may be issued as the first, least severe form of discipline for an industry professional in breach of the Act or Rules.
• Administrative Penalty: Schedule 2 of the Bylaws sets out the breaches of the Act and Rules that are eligible for an Administrative Penalty. The precise amount of the penalty may escalate based on whether the industry professional involved has been disciplined for similar activity in the past. Unless otherwise indicated, penalty values in Schedule 2 are minimums and will vary based on a number of factors.
• Hearing: If the alleged breaches are severe enough, RECA may proceed with a Hearing into an industry professional’s conduct. This is especially true if the industry professional involved has previously received discipline for the action(s) in question and still continued the activity. Among other things, Hearing Panels may order an industry professional to be suspended and/or pay a fine of up to $25,000 for each finding of conduct deserving of sanction.

RECA is confident that industry professionals want to do things right and in compliance with the legislation. Through scalable enforcement, first infractions, particularly when they are minor in nature, can be dealt with through a less severe form of discipline or sanction, with the hope that the infraction doesn’t occur again. Of course, aggravating factors may elevate something from what
would have been a Letter of Reprimand to an Administrative Penalty or a Hearing situation. (For more informati on on determining an appropriate sanction level, review RECA’s blog post on the Principles of Sanction.)

RECA’s scalable enforcement policy is a means through which it seeks regulatory balance. RECA’s approach to compliance and enforcement of standards is proportionate, effective, transparent and timely and, when appropriate, it will focus on providing information, advice and suggestions for change in future behaviour. However, when necessary, RECA will utilize the full range and level of sanctions available in its overall strategy to obtain industry compliance and protection of consumers.

Do you agree with the concept of scalable enforcement? Can you think of any other examples of scalable enforcement?