Advisory

Purpose

BCFSA is releasing proposed amendments to the Real Estate Services Rules (the “Rules”) for public and licensee comment. The proposed Rules amendments are intended to strengthen and clarify BCFSA’s authorities in relation to real estate data collection.

BCFSA is also releasing its 2023 Real Estate Brokerage Data Call Summary Report. The 2023 data call collected information on residential real property sales and the use of the Home Buyer Rescission Period. The 2023 data call built on the February 2022 data call and will help inform BCFSA about market-driven consumer risks and contribute to evidence-informed policy development and decision making.

BCFSA is seeking feedback on the proposed Rules. Comments can be submitted through the Consultation Feedback Form. The consultation period will close on August 27, 2023. Additional information is available on the Consultation page.

Background Information

BCFSA collects data from its regulated entities and institutions in order to meet its mandate of ensuring financial services sector safety and soundness, protecting consumers, and ensuring public confidence in financial services.

Starting in 2024, BCFSA intends to conduct a mandatory data call with real estate brokerages, seeking similar information as requested in 2022 and 2023 about residential real estate sales to assess potential consumer risks that are linked to real estate market conditions (e.g., multiple offers, sale price above asking price, and unconditional offers).

Need for and Effect of Proposed Rules

The Rules currently provide BCFSA with authority to collect a wide variety of data from brokerages. However, the importance of a broad data set of indicators to assess potential consumer risks and support consumer protection suggests that additional rules are needed to provide greater clarity for future mandatory data calls. The proposed package of Rules amendments would provide BCFSA with this authority.

Other amendments to licensee disclosure and record retention requirements are also proposed to formalize long-standing best practices guidance and clarify the type of real estate data that BCFSA could request.

Data Collection

Real estate market conditions can change rapidly, creating consumer risks. To assess and respond to these risks, and provide advice to government, BCFSA needs flexible authorities to collect information and records that are timely and comprehensive.

BCFSA anticipates the need to conduct three main types of data collection:

• Ad hoc data collection to require licensees to compile and transmit information maintained in their records, and/or copies of original documents, from time to time, as requested by the Superintendent (e.g., through a data call). This type of data collection generally aligns with the purpose of exploring market practices in a timely manner;
• Periodic data collection to require licensees to submit information and/or records, as specified by the Superintendent, at regular intervals (e.g., monthly or quarterly), in addition to existing annual filling requirements. This type of data collection generally aligns with policy research and program evaluation activities; and

• Contingent data collection to require licensees to submit certain information, and/or records within a specified period after a triggering event, as specified by the Superintendent (e.g., filing copies of certain consumer disclosure forms within a certain number of days of making the disclosure). This type of data collection generally aligns with exploring market practices in a timely manner and supporting investigations.

The data collected will contribute to BCFSA’s evidence-informed policy development and decision-making to help protect British Columbians during life’s most important financial decisions – like buying or selling property. Collecting additional information about real estate services and brokerage activities will support a strengthened basis for evidence-informed policy and regulatory decision-making. This will enable BCFSA to better assess market practices, compare year-over-year trends in market conditions, and evaluate policy or legislative changes in relation to the real estate segment and the overall financial services sector. Relevant data also helps to support investigations and ensure that the highest standards are being upheld for real estate licensees, which strengthens public confidence.

If the proposed Rules are adopted, BCFSA will further outline any requests for data at the time when the data is needed. Specific requirements for requests will be made through regulatory statements issued by BCFSA to licensees and brokerages. This approach will allow reporting requirements to be built out over time and amended as needed. In keeping with the above, the final requirements for the 2024 data call will be released in a separate regulatory statement, that will follow the adoption of any new Rules.

Disclosure and Retention Requirements

As part of this package of Rules amendments, BCFSA is also looking to strengthen record-keeping and disclosure requirements in some key areas. The proposed changes include:

• Retention of offers: The proposed Rules amendments would require brokerages to retain copies of any offers prepared or received by, or on behalf of, a brokerage in relation to a real estate trade or prospective trade. Requiring brokerages to retain copies of offers will help BCFSA gather data about market conduct and market-driven consumer risks (e.g., multiple offer situations).

It is BCFSA’s understanding that many brokerages may already be retaining offers considering other requirements placed on them by BCFSA and/or local real estate boards (“Boards”); and

• Written disclosures of conflicts of interest: The proposed Rules amendments would require licensees to make disclosures of conflicts of interest (under Section 30) in writing and retain them as part of brokerage records.

Implementing a requirement for written disclosures supports greater transparency for consumers, who will be able to refer to the content of the disclosure provided to ask questions and seek independent advice. Such disclosure is consistent with best practices – for example, written disclosures of conflicts of interest are required for mortgage brokers in B.C., and real estate licensees in Quebec and Alberta. Written disclosures also allow licensees to have a full record of what information was disclosed to clients and when, and to update the disclosure as needed as circumstances change.

Protection of Data – Privacy and Security Implications

If the proposed rules are approved, licensees and brokerages will be legally required to provide data pursuant to that authority to BCFSA. This requirement will serve as an authorization for real estate brokerages and licensees to disclose that information to BCFSA under the respective privacy requirements for those businesses outlined in the Personal Information Protection Act (“PIPA”).¹ This includes such information that can be considered personal information, such as property addresses.

BCFSA operates under the Freedom of Information and Protection of Privacy Act (“FOIPPA”). BCFSA takes its obligations under FOIPPA seriously and ensures compliance with all privacy laws. BCFSA conducts privacy impact assessments and security threats and risk assessments on its initiatives and systems to ensure compliance with legislation. BCFSA takes seriously the requirement imposed under s. 30 of FOIPPA to make reasonable security arrangements to protect personal information.

Additional Information

For more information about BCFSA’s data collection activities and the current public consultation opportunity:

• Consultation page
• Annotated proposed Rules amendments
• BCFSA 2023 Data Call Summary Report
• BCFSA 2022 Data Call Summary Report