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    Ontario weighs takeover of RECO after audit finds ‘significant issues’ in handling of iPro scandal

    homegoal.caBy No Comments3 Mins Read


    The Ontario government is preparing to “assume control” of the Real Estate Council of Ontario (RECO) after reviewing a scathing report into the industry watchdog’s handling of the iPro Realty Ltd. fraud scandal. 

    On Thursday,  Public and Business Service Delivery and Procurement Minister Stephen Crawford publicly released a letter he wrote to RECO chair Katie Steinfeld in which he states his intention to appoint an administrator to take control and responsibility of RECO to “prevent serious harm” to the public and restore confidence in the organization.

    Crawford has given RECO’s board 15 days to respond before he makes a final decision. 

    “The report identifies significant issues with RECO’s practices, processes, and procedures, and raises questions about RECO’s organizational cultures,” wrote Crawford, adding that this environment has led the real estate sector to lose confidence in its regulator.

    Two weeks ago, Crawford received the report conducted by Dentons LLP Canada, which was commissioned by RECO. The report was released publicly on Thursday evening.

     

    Former registrar ‘deviated from standard process’

     

    Real estate professionals and consumers alike have been dismayed by RECO’s handling of the matter, particularly the fact that it waited three months to alert the public after former registrar Joseph Richer learned of Mississauga-based iPro’s $10.5-million trust account shortfall. Richer left RECO in August. 

    The news of Richer’s exit came out following RECO’s highly scrutinized decision not to lay charges against iPro Realty’s co-founders Rui Alves, a former RECO board member, and Fedele Colucci.

    The report found Richer “deviated from RECO’s standard process” in initiating an undertaking agreement in response to the shortfall in iPro’s trust accounts, rather than launching a formal investigation. The report also found the former registrar did not inform the board of the iPro issues until after an undertaking agreement was signed with the brokerage, and is recommended sweeping improvements around oversight, transparency and operational consistency.

     

    RECO embraces report recommendations

     

    RECO said it fully endorses all recommendations and has already begun implementing reforms, including stronger regulatory oversight, a new risk framework and increased stakeholder engagement.

    The regulator added it will continue working with the minister to understand “the proposed process, scope, and next steps.”

    Dentons represents RECO in the ongoing court case against iPro. 

     

    OREA and TRREB respond

     

    In a joint statement released Friday, the Ontario Real Estate Association (OREA) and Toronto Regional Real Estate Board (TRREB) said they “fully support” Minister Crawford’s decisive action.

    “We endorse the intention to appoint an administrator to ensure RECO gets back to the basics of fulfilling its consumer protection mandate,” it reads. “OREA and TRREB remain committed to collaborating with the Government of Ontario on reforms that strengthen transparency, accountability, and public confidence in Ontario’s real estate market.”