Since the KPMG Governance Review Report came out in July 2019, RECA has received questions and concerns from industry professionals and consumers about certain statements that could be misleading.
The KPMG report raises many serious concerns about the governance of RECA. RECA continues to take these concerns seriously.
You can read the full KPMG Governance Review Report.
There are, however, many claims circulating that are incorrect or misleading. The information below provides facts and figures to help you stay informed about these important questions.
In the past few weeks, we have answered concerns individually and our explanations and clarifications have been appreciated and changed minds.
This is misleading.
RECA has $6.6 million in reserve.
This reserve is in short term investments that are to be used in the event RECA dissolves or has to deal with catastrophic events. This reserve is actually low, as it’s appropriate for agencies to have enough in reserve to cover one year to 18 months of operations. The $6.6 million in our reserve would not cover RECA’s operations in this timeframe.
RECA also holds just over $4 million in the Real Estate Assurance Fund (the Fund). This is money that is legislatively protected and has legislated minimums. It is to be paid out to consumers who have suffered a loss due to fraud or breach of trust involving an industry member, and who have successfully applied for compensation from the Fund. The Fund cannot be used for operations.
RECA receives almost all licence revenue at the end of the previous fiscal year during licence renewals, so on September 30 of any given year, it may seem like RECA has a lot of money on hand at the end of the year. However, this is operating revenue for RECA’s next fiscal year, which runs October 1-September 30.
Labeling this $20 million as “reserves” and using this amount in the context of reserves is misleading, and discussions of RECA’s finances in this context is inappropriate.
RECA’s financial details are a matter of public record. The audited financial statements and annual reports are available under “About RECA” on reca.ca. RECA’s annual budget is approved by the members of Council (or an Administrator appointed by Service Alberta, going forward, as per Bill 15).
RECA believes in and embodies openness and transparency. In 2017, RECA consulted all stakeholders on openness and transparency and approved an Openness and Transparency Policy. RECA publishes all discipline decisions and many of Council’s policies, and RECA communicates all changes by Council that affect industry members and consumers. Council agendas and meeting minutes are also publicly available.
The majority of real estate regulators in Canada do not post Council/Commission meeting agendas or minutes publicly.
RECA has both a Stakeholder Engagement Policy and Consultation Policy that name associations as primary stakeholders. In fact, RECA has held seven open consultations on major topics in the last three years, including, but not limited to:
RECA also sends surveys to all stakeholders that are not formal consultation, including the recent communications survey, re-licensing education surveys, customer service surveys, and the post-investigation surveys.
RECA also hosts Real Estate, Mortgage Broker, and emerging leader forums twice a year, where active brokers and emerging leaders from across the province meet with RECA directors and practice advisors to talk about issues and raise any concerns.
When we say RECA wants to hear from you, we mean it! Learn more about past and present our on consultations webpage.
RECA also has six industry advisory committees made up of active industry professionals, including residential real estate, commercial real estate, property management, mortgage broker, real estate appraiser, and condominium manager implementation committees. RECA even has legislative review and consumer advisory committees. All of these committees provide information and recommendations up to Council directly from industry and consumer representatives.
The KPMG Governance Review Report did indicate that industry associations, including AMBA and AREA expressed concerns about a lack of meaningful consultation, and recommended RECA “solicit feedback and input from its industry stakeholders on the adequacy of its stakeholder engagement activities…”
KPMG did not make this finding in their Governance Review Report.
In 2015-2016, RECA received a third-party regulatory review conducted by Field Law. That report found RECA to be a high-performing regulator. RECA has implemented almost all the recommendations (within its power) in Field Law’s report to become an even more effective regulator.
KPMG made no such finding in their Governance Review Report.
The report notes that there are “potential deficiencies in how Council grants spending authority to Administration and monitors expenditures,” and some issues with aligning actual results with budgeted line items. The report goes on to mention the approval of external legal fees in excess of $100,000 not appearing in Council minutes. These expenditures were approved by the Chair of Council, which was within their authority.
The scope of the KPMG report included a review of Council finances. The fact that financial issues were not mentioned anywhere else in the report suggests RECA manages its finances appropriately.
Incorrect and Misleading
The Real Estate Act (the Act) is provincial legislation which RECA administers on behalf of the province. RECA is, and has always been, accountable to Government of Alberta.
RECA’s authority derives from the Act and the Minister of Service Alberta. Section 76 of the Act gives the Minister the authority to conduct a review, and to make orders that Council must follow—or they risk being dismissed by the Minister. The new Section 76 in Bill 15 dismisses Council.
Some professionals expect RECA’s Executive Director and staff to report to industry professionals and/or their trade association in a manner similar to a membership type of association. To expect this of RECA is inappropriate. There is a big difference between the roles and mandates of regulatory bodies and trade associations. RECA reports to and is under the oversight of its Council, and it acts in the public interest.