In the wake of a scathing report from the provincial Auditor-General in 2021, the Ontario Motor Vehicle Industry Council (OMVIC) is in the process of changing its governance for the first time since it was founded in 1997. The goal of overhauling the body, which regulates auto dealers on behalf of the province, is to better protect consumers by reducing the proportion of industry representatives on the board of directors and changing the selection criteria to “highlight qualifications that best serve consumer interests.”
The Auditor-General’s report found that OMVIC was falling short in its mandate to “protect the public in their transactions with motor vehicle dealers and salespersons.” Selected ministries or agencies like OMVIC are scrutinized by the Auditor-General every year, to assess whether they are spending money prudently and operating efficiently.
Together with sizable dealer and salesperson registration fees, OMVIC is funded by car buyers. Every time consumers buy, lease or finance a vehicle in Ontario, they pay a $10 transaction fee to the provincial vehicle sales regulator.
OMVIC was established in 1997 to regulate auto dealers and protect consumers by enforcing the provincial Motor Vehicle Dealers Act of 2002. If a buyer feels they have been mistreated or cheated, they can file a complaint to the regulator. OMVIC acts as a mediator in such disputes and can compensate consumers whose claims are successful. It can also discipline dealers and salespeople who are deemed to have acted improperly. But the report found that about half of complaints made between 2016 and 2020 resulted in no resolution and most investigations did not result in enforcement action.
Several of the report’s recommendations targeted the OMVIC board of directors, suggesting it work with the provincial government to establish fixed term limits, reassess the proportion of industry representatives, and revise the selection criteria of board members to enhance consumer protection.
In response to the Auditor-General’s report, the Ministry of Public and Business Service Delivery (formerly the Ministry of Government and Consumer Services), which oversees OMVIC, has ordered that the new OMVIC board be reduced to nine members from 12, consisting of three industry representatives, three ministerial appointees and three members of the public, dramatically reducing the representation of dealers on the board. In addition, all directors must “possess a positive orientation for proactive consumer protection initiatives.”
Historically, the board has had 12 members, nine of which were dealers. But several of the dealer positions have been left vacant.
Five industry representatives resigned between July and November 2022, and one was deemed “inactive.” The OMVIC Licence Appeal Tribunal (LAT) revoked the licence of the inactive representative, Cliff Pilon, as of Jan. 12, 2023.
As a result, there are six active board members, or barely enough for quorum.
Asked about the challenge of maintaining quorum with so many vacancies on the board, OMVIC chief executive officer Maureen Harquil said, “OMVIC’s bylaw expressly contemplates vacancies and the continued conduct of board business despite periodic vacancies.”
According to Mohamed Bouchama, a consumer advocate and former OMVIC board member, the dealers may have quit because they didn’t like the changes recommended by the Auditor-General’s report. “They knew there were only going to be three dealers,” he says.
Bouchama says OMVIC has “no teeth” right now. “It starts at the board. The government needs to appoint some really pro-consumer advocates.”
OMVIC sent out a call for candidates in late May, and according to Harquil, received more than 30 applicants from industry and more than 100 from the public. Five candidates – two dealers and three members of the public – will be elected at the upcoming June 28 annual general meeting. The other three will be appointed by the Ministry.
“Each director will be required to complete an annual declaration of commitment to consumer protection, and an appropriate evaluation process will then be considered by the OMVIC board,” she says.
The Ministry has also ordered the establishment of an advisory council to the board, consisting of consumer and industry representatives.
“The specific details regarding the selection process and terms for members of the Consumer Advisory Council are currently being developed,” Harquil says.
In other Delegated Administrative Authorities, such as the Travel Industry Council of Ontario, the Bereavement Authority of Ontario, and the Home Construction Regulatory Authority, which are responsible for ensuring consumer protection and public safety laws are applied and enforced, the board of directors and advisory committee frameworks vary but are thin on the number of representatives tasked with providing consumer protection.
One industry insider says there are benefits to having a significant amount of input at the board level from dealer groups, because they are the ones who understand how the industry works.
“There were good reasons to have a [larger] number of dealers on the board of directors,” says Warren Barnard, a recently retired executive director of the Used Car Dealers Association (UCDA), who has not been on the OMVIC board but has worked closely with OMVIC. “They know how regulations will affect the industry and what negative aspects could come from that.”
He said he feels the Ministry of Public and Business Service Delivery may be using a cookie-cutter approach to the Delegated Administrative Authorities. “Real estate sales, booking a trip to Greece or bereavement is very different from selling cars,” he says.