OPINION: RECO’s board reform shouldn’t sideline registrant expertise

The views expressed in this column are solely those of the author.

Earlier this year, the Minister of Public and Business Service Delivery issued an order that prohibits elected members of the Real Estate Council of Ontario (RECO) board of directors from being registrants, brokerage employees or representatives of industry associations. This change to RECO’s governance model, among others, came in the wake of the iPro Realty real estate scandal, the largest in Ontario’s history. The order signals a commitment by the province to separate the governance of the regulator from those it regulates.

While that objective is important, independence should not come at the expense of expertise. The challenge is designing a governance framework that preserves registrant expertise while maintaining the independence necessary to protect the public interest.

Credit where it’s due

To be clear, Minister Crawford and administrator Jean Lépine deserve a tremendous amount of credit for their bold decisions in the aftermath of the iPro Realty scandal to restore consumer trust. Since taking office, the administrator has strengthened communication, instituted a strong plan for reform at the regulator and sought feedback from across the industry through meetings and several public forums. These moves have addressed many of the core concerns industry leaders had with the regulator pre-dating the iPro scandal and have set the regulator on a path to renewal under new leadership.

Reforming the RECO board of directors has been under consideration by the ministry dating back to the review of the Real Estate and Business Brokers Act (REBBA), now the Trust in Real Estate Services Act (TRESA), in 2017 and continuing through the governance reforms introduced in 2024. Those reforms, which were generally supported by the real estate industry, established a board with a clear majority of independent, non-registrant directors while preserving a limited role for registrants.

While independent, skills-based governance is an increasingly common objective for modern regulators, there is no universal best practice requiring the complete exclusion of industry licensees from governing boards. Many Canadian professional regulators continue to include a limited number of practising professionals alongside public appointees, recognizing that frontline expertise can strengthen oversight while maintaining a clear public-interest mandate through balanced board composition and robust conflict-of-interest rules.

Independence isn’t only about registrant status

Similarly, appointing non-registrants to the RECO board is not a guarantee of independence. Builders and lawyers, for example, have well-established policy differences with the real estate industry over requirements under TRESA to be registered to trade in real estate. Are we to assume that representatives from those sectors, if appointed to the board, will act independently, while concluding that real estate professionals cannot? A regulator is best served not by a board devoid of industry expertise, but by one that combines a majority of independent directors with members who possess the practical experience necessary to ask informed questions, challenge assumptions and hold management accountable.

The Dentons report makes clear that one of the RECO board’s most important responsibilities is overseeing the governance, policies and processes through which the registrar exercises significant statutory authority. While the registrar must exercise statutory powers independently, that independence does not preclude meaningful accountability to the board. Good governance requires the registrar to keep the board informed of significant regulatory matters so that directors can oversee organizational performance, identify risks and protect the public interest. That oversight is strengthened by including directors with recent registrant experience who can bring practical expertise to discussions of complex regulatory issues and consumer protection.

An advisory council is a step forward, if done right

Notwithstanding those concerns, the minister has made the order to reform the RECO board of directors and the order is final. That order includes the creation of an advisory council to the board, which will include industry associations, brokers, salespersons and brokerage representatives to provide advice and guidance on real estate matters to the Board.

The council is a positive step in response to industry concerns about registrant expertise, but its implementation will be critical. RECO has, over the years, had various forms of public and industry advisory groups with limited impact. Their ability to provide the board with good guidance and advice will depend heavily on their terms of reference, which are being finalized by the administrator.

4 ways to make the council work

To start, the terms of reference must stand the test of time and future changes in RECO leadership. In the future, the advisory council should not be relegated to a consent agenda item for the board if new leadership at RECO does not like what it has to say. It should maintain some level of independence from RECO management and include participation from the ministry, who can help protect the independence and effectiveness of the advisory group.

Second, the RECO board of directors should respond annually to all advisory council recommendations and that response should be made public. For the council to be meaningful, its advice must be more than consultative. RECO should be required to formally consider and publicly respond to recommendations, outlining which recommendations will be implemented, which will not and the rationale for those decisions.

Third, the advisory council should be chaired by a board member. This would establish a direct connection between the two, ensuring that the practical perspectives of consumers, registrants and other stakeholders are brought directly into board deliberations.

Finally, the minister should consider using the existing power of appointment to appoint at least one individual with current experience as a real estate registrant to the board of directors. On a board where independent, non-registrant directors hold a clear majority, the addition of a single registrant would not compromise its independence. Instead, it would provide valuable frontline expertise to assist the board in overseeing the registrar’s administration of TRESA, evaluating the practical implications of regulatory decisions and ensuring governance is informed by a current understanding of the profession it regulates.

The reforms to RECO’s governance represent an important step toward strengthening public confidence in Ontario’s regulator. However, independence and expertise should never be viewed as competing objectives. 

The strongest regulators are those that combine independent governance with informed decision-making, ensuring their boards have both the objectivity to act in the public interest and the practical knowledge to effectively oversee those charged with administering the law. As the province and Mr. Lépine continue their work to strengthen RECO, preserving meaningful registrant expertise within its governance framework should remain a priority.

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