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BC Financial Services Authority (“BCFSA”) is issuing this Advisory to notify licensees that amendments to the Real Estate Services Rules (“the Rules”) respecting trust accounting and real estate teams (“teams”) were approved by the Minister of Finance on September 23, 2022.
On October 1, 2022, BCFSA is bringing into force an amendment to the Rules that will repeal Section 71 -the requirement to notify savings institutions of pooled trust accounts.
The repeal of Section 71 will reduce duplication between BCFSA’s Rules and Canada Deposit Insurance Corporation’s (“CDIC”) deposit insurance protection rules. Prior to its repeal, Section 71 required brokerages to notify their financial institution, other than a credit union, that an account was a pooled trust account and to annually provide a list of beneficiaries of that account and the amount held on their behalf.
With the repeal of Section 71, brokerages may now take full advantage of CDIC’s new streamlined reporting requirements that came into force on April 30, 2022. Eligible brokerages that hold funds in trust may now designate those accounts as professional trustee accounts with their financial institution(s) insured by CDIC. Brokerages that choose to do this must attest annually to their financial institution that they qualify as a professional trustee under the Canada Deposit Insurance Corporation Act and indicate which accounts are professional trustee accounts. Once an account is designated as a professional trustee account, brokerages are no longer required to make an annual disclosure of the identities of the beneficiaries of these trust accounts and will only need to provide this information to CDIC on request.
Brokerages that do not opt-in to these streamlined reporting requirements will have their deposits treated as general trust accounts, which will mean that detailed beneficiary information reporting requirements will continue to apply.
BCFSA has also received the Minister of Finance’s consent to amend the Rules in accordance with the proposed amendments respecting real estate teams (see amended Rules). BCFSA plans to bring the amended Rules into force on April 1, 2023.
Licensees are reminded that once the Rules are in force, teams consisting of a single licensee and an unlicensed assistant will no longer be allowed to operate as a team. Licensees in this situation should utilize this time to update their marketing materials so they are ready to cease their team operations by the enforcement date or find another licensee to join their team so they may continue operating as one. Further, licensees that are currently acting as a team but not registered or advertising under a joint name under an exemption, are reminded that they must register their team with BCFSA once the amended Rules are in force.
BCFSA will provide more information on these important changes later this year. In the meantime, if you have any questions about the upcoming changes to teams, please review our FAQs or contact a practice standards advisor
To satisfy the requirements under the Financial Services Authority Rule-Making Procedure Regulation and to ensure good governance and sound policy decision-making, BCFSA undertook a comprehensive public consultation on the proposed Rules amendments between February 22 and April 23, 2022. To see what participants had to say and to learn how BCFSA raised awareness of the consultation opportunity, please see the Consultation Summary Reports on Teams and Trust Accounting.
Licensees that have questions about the repeal of Section 71 or the upcoming changes respecting teams may contact a practice standards advisor for more information.