Advisory

Purpose

BC Financial Services Authority (“BCFSA”) is releasing amendments to the Real Estate Services Rules (“Rules”) for public and licensee comment. These amendments are intended to:

• strengthen the regulatory framework for real estate teams, and
• reduce duplication and align BCFSA’s brokerage trust accounting Rules with future Canada Deposit Insurance Corporation (“CDIC”) rules.

BCFSA is seeking feedback on the proposed Rules through a consultation feedback form available from February 23, 2022, until April 24, 2022. The feedback form and all applicable material, including the draft Annotated Rules, Frequently Asked Questions, and other relevant information, can be found on BCFSA’s consultation page.

Background

Teams

The lack of explicit regulation of real estate teams has created confusion among licensees and consumers about the duties owed by licensees to clients and the business practices of teams. BCFSA has heard from licensees that they want more guidance in the regulatory framework on teams, improvements to the team creation process, and greater overall regulation of teams.

BCFSA’s amendments to the Rules are intended to clarify the role and duties of real estate teams and team members. The amendments include the following:

• a definition of real estate teams;
• a requirement for all teams to register with BCFSA;
• a requirement for team members to provide trading services through their team only; and
• a requirement for team members to clearly identify their team name in all advertising.

Trust Accounting

Changes to CDIC deposit insurance protection rules are taking place on April 30, 2022. Under these changes, eligible professional trustees (such as brokerages licensed under the Real Estate Services Act) will only need to provide beneficiary information to CDIC by request, rather than annually as is currently the case. Section 71 of the Rules duplicates CDIC’s current trust account reporting requirements. By repealing section 71, BCFSA will align its requirements with CDIC’s rules, allowing brokerages to designate certain accounts as professional trustee accounts with their financial institution. This will enable brokerages to benefit from the streamlined information reporting requirements that CDIC is implementing.

Additional information

As required by the Financial Services Authority Rule-Making Procedure Regulation, BCFSA must conduct a public consultation for a period of 60 days on proposed Rules amendments. To satisfy this requirement, BCFSA is hosting a feedback form on its website for public comment from February 23, 2022, until April 24, 2022. The feedback form seeks specific feedback on the amendments to the Rules regarding real estate teams and brokerage trust accounting requirements.

Responses and comments from the feedback form will form the basis of a consultation summary report, which will be used to inform BCFSA’s decision to seek ministerial approval to enact the new Rules. The feedback form and all applicable material, including the draft Rules, Frequently Asked Questions, and other relevant information, can be found on BCFSA’s consultation page.