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A sold house located at 4650 Granville Street in Vancouver, British Columbia, Tuesday, February 9, 2016.

Rafal Gerszak/The Globe and Mail

Much tougher penalties, including the possible forfeiture of enormous commissions and stiffer fines, and more transparent oversight bodies are in the works for B.C.'s real estate agents, according to an interim report from a provincially appointed group charged with responding to Globe and Mail reports of dubious practices within the industry.

Carolyn Rogers, chair of the advisory panel, said on Tuesday her team has delved into some disturbing issues, and restoring public confidence in the Real Estate Council of British Columbia could mean an overhaul of its governance model to ensure complaints are handled properly.

Premier Christy Clark has said the provincial government will step in if the council does not act on the final recommendations of the independent advisory group.

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"The public expects that people who handle large sums of other people's money, like realtors, to adhere to strictest legal and ethical standards at all times," Ms. Rogers told reporters as part of an update before her group's final report in June.

"It is particularly disturbing for the public to hear allegations that licensees are being trained by their managing brokerage to engage in sales strategies that are clearly designed to take advantage of consumers."

Independent Advisory Group Letter

Specifically, Ms. Rogers said she is watching how the real estate council handles an investigation into New Coast Realty. The Globe reported last week on an audio recording of New Coast's owner instructing his firm's sales teams on how to make a quick commission by persuading clients to sell their houses for less money than they want.

Ms. Rogers also said the controversial practice of shadow flipping cannot be tolerated.

Formally known as contract assigning, shadow flipping involves arranging a property sale and then finding another buyer willing to pay more before the deal closes. She said her office will study whether Ms. Clark's recent pledge to end the practice goes far enough, noting the advisory group may recommend all contract assignments be reported directly to the council.

The rules on the the practice of "double-ending" or limited dual agency agreements – where an agent acts for both the buyer and the seller – should also change, Ms. Rogers said.

"We acknowledge there may be circumstances where this practice does not create a clear conflict of interest, but we consider those to be very rare and potentially outweighed by the risk that advantage may be taken of some consumers," she said in an update letter to the council on Tuesday.

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Ms. Rogers said the existing disciplinary fines – which, to the public, seem like merely "the cost of doing business" for the companies – need to be tougher to be effective and she believes that when misconduct is found, the agent should be required to return all the profits from the transaction.

She acknowledged that the council asked the provincial government in 2014 to change its real estate services legislation to increase the maximum fines for an agent's misconduct from $10,000 to $25,000, as is the law in Alberta and Ontario.

A Globe investigation last week found that about half of the 89 agents that faced the council's disciplinary processes last year were forced to pay only for the costs of the investigation, escaping an additional fine or suspension.

Provincial Finance Minister Mike de Jong said the advisory group is "on the right track" and has raised serious concerns about the oversight of the real estate profession in B.C.

Larry Buttress, the Real Estate Council's deputy executive officer, praised the work of the group so far and said it was "absolutely fair" that it was questioning the ability of the industry to regulate itself.

"We're confident in our ability to serve the public well," Mr. Buttress said.

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The council has regulated the industry since 2005.

Almost all of B.C.'s agents also answer to regional real estate boards that guard access to the Multiple Listing Service. The 11 boards can discipline members, but Ms. Rogers said she is concerned about the unique role of these "large, well-resourced and powerful trade organizations."

Information about any discipline meted out by these boards to real estate agents who act improperly is only accessible by other members.

"The roles need to be cleared up," she said. "What we have observed is the real estate boards have assumed a quasi-regulatory role. Often they position themselves as the place for consumers to launch complaints," she said. "The boards' disciplinary practises are not transparent; there is no requirement to report publicly on whether a realtor is disciplined."

When The Globe informed the Real Estate Board of Greater Vancouver it had obtained 22 of its disciplinary decisions from the past five years, a law firm representing the board sent a letter to the paper threatening a lawsuit.

"Since you are not a licensed member of the board, you are not permitted to use or access these reports in any newspaper article or otherwise," the letter from lawyer Daniel Bennett stated. "If you choose to engage in such misconduct, we will seek our client's instructions to commence a civil action against the Globe and Mail."

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Dan Morrison, president of the Real Estate Board of Greater Vancouver, whose 12,500 members represent just over half B.C.'s agents, said his association fully supports the work of the advisory group and is responding to its request for "a tonne of information about our processes."

"The biggest single difference is that we're a private member's organization," he said on Tuesday afternoon, noting he was on the way to a client meeting and had not yet seen Ms. Rogers' letter.

"We are an additional layer on top of the council and on top of the law."

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