On Tuesday, the Real Estate Council of Ontario (RECO)’s board of directors, which oversees strategy in RECO’s mandate of consumer protection, received a letter from Ontario’s minister of public and business service delivery that presented five orders about changing the board composition.
Five new orders from the Ontario government
As stated on RECO’s website, the five orders are to:
- Decrease the number of board members from 12 to nine by June 1, 2024
- Require that all board members possess a positive orientation for proactive consumer protection initiatives, by June 1, 2024
- Require that no more than 34 per cent of the members of the board are drawn from the real estate industry, including registrants, by June 1, 2024
- Establish a nominations committee with requirements around eligibility criteria for nominated board members
- Establish an industry advisory council by June 1, 2024, comprised of members representing the interests of real estate professionals, to report to and advise the board
These changes are intended to help with several things, including enhancing sector accountability and consumer protection and creating an industry forum to identify issues and give advice to RECO’s board.
The changes should also offer the chance for the board to “enhance the execution of its responsibilities relating to oversight of the real estate industry and the protection of consumers, mirroring recommendations from the Auditor General of Ontario to RECO and changes made by other Ontario regulators”.
Changes in response to 2022 Auditor General’s report recommendations
“The recent minister’s orders requiring changes to the composition of RECO’s board of directors is in response to recommendations in the 2022 Auditor General’s report for the Minister of Public and Business Service Delivery to reassess the structure of RECO’s board and bring it more into line with modern best practices. This is consistent with recent changes made to the structure of the boards of other delegated authorities,” RECO CEO, Michael Beard, says.
Examples of such delegated authorities include the Ontario Motor Vehicle Industry Council and the Travel Industry Council of Ontario, which have made changes to improve oversight and create a balanced, skills-based board.
The importance of a skills-based board
Jody Lavoie was elected to RECO’s board in 2010 and served as vice chair twice and chair twice. During his time with the council, he says he and others knew that a skills-based board was the future and that they looked for a CEO who shared this view.
“Michael Beard was selected as the CEO and his approach to working with the board, combined with his ability to work with the ministry, pushed many things forward – including a skills-based board for RECO,” Lavoie recalls. “While agents come to the table with excellent skills and experience, the current system of elections never guarantees an effective mix of skills.”
About the Auditor General’s investigation and report during his time with RECO, Lavoie feels it was “relatively smooth, (and) it did highlight some areas for improvement. One was the board: can you effectively regulate yourselves? I believe we always have, but I also see the future.”
He recalls, “The government telegraphed the changes during the recent hearings and they indicated that change was coming fast, before the end of the year. And here we are.”
Lavoie feels that the upcoming changes are good for the industry. “Agents will still be well represented and have a seat at the table while bringing experts to the table to ensure a professional and accountable board of directors is always at the helm. I know this is the right direction for RECO.”
Although Lavoie would have hoped for a larger percentage of the board to be made up of agents, he notes, “The plan also has the number of board seats shrinking from 12 to nine, which is leading practice for this type of board.”
The way forward
RECO will work with the ministry and stakeholders to implement necessary changes, which will require updates to RECO’s bylaws and additional updates due to Ontario’s not-for-profit corporations’ statute.
“RECO recognizes the current board’s contribution to the development of its 2024-2026 strategic plan and will be focused on achieving the goals therein in the years ahead. We will work diligently with all stakeholders to implement the minister’s orders, and our goal is to ensure transparency and effective communication with the industry as we put these changes into action,” Beard explains.
View the minister’s orders in full.