Agents gathering at Queen’s Park on Tuesday/photo by James Phillips
Real Estate Council of Ontario (RECO) administrator Jean Lépine says he’ll stop at nothing to make sure agents whose commissions were trapped by the iPro Realty Inc. trust scandal get everything they’re owed, recognizing that those affected are running out of patience.
“The commitment we’ve made is that we won’t rest until that’s done,” he said in an interview.
Jean Lépine was appointed the RECO administrator on behalf of the Ontario government in November.
Lépine, however, acknowledged there is no clear timeline for having agents made whole, and said he understands concerns that the process is moving too slowly.
“There’s a certain perspective that this isn’t moving fast enough,” he said. “I get that.”
Based on the claims received by mid-December, the projected total losses amount to approximately $30 million, according to the insurance program manager.
Lépine was appointed in November, effectively putting control of the real estate regulator in the provincial government’s hands.
The decision came following Minister Stephen Crawford’s review of a scathing audit by Dentons Canada LLP of RECO’s handling of the $10.5-million iPro Realty Ltd. fraud scandal.
RECO discovered a “significant shortfall” in iPro’s trust account. However, the regulator did not move to shutter the firm and freeze its assets until August, keeping the trust account breach hidden from the public and agents for three months. Charges were not laid against iPro’s principals.
Agents actively pursuing full repayment
Lépine spoke with Real Estate Magazine on Tuesday afternoon, just hours after roughly 100 agents descended on Queen’s Park in Toronto to demand “accountability, transparency, and immediate justice” following what demonstrators called “one of the most serious regulatory failures in Canadian real estate history.”
“Partial payments are not justice. Delayed payments are not accountability. Half measures are not protection. Partial action after total failure is not acceptable,” reads a notice sent to the media before the protest.
On Dec. 16, RECO committed to compensating agents 50 per cent of what they were owed, starting that week. RECO has since clarified that accepting the initial 50 per cent payout does not limit additional payments.
RECO said it took this approach to ensure claimants received an initial portion of commissions owed as quickly as possible, while it continues to pursue the recovery of additional funds through ongoing civil proceedings.
Lépine noted the financial impact on families during the holiday season and into the new year, adding that RECO plans to improve communication.
“We are committing to making sure that we provide regular updates,” Lépine said, citing insurer activity, civil proceedings, and other actions underway to recoup more funds to release to affected agents.
Progress so far
According to an update released by RECO on Tuesday, the following progress has been made toward repaying agents:
- 50 per cent pro-rated commission payments are underway
- 1,500 of 2,650 claim forms have been processed
- Payment offers have been issued on 700 processed claim forms
- Updated insurance acknowledgement forms have been in place since Dec. 30.
Approximately $5 million in consumer deposit claims have already been paid.
Virtual town halls and summit planned
Lépine said RECO will soon announce dates for virtual town halls, which will give agents a platform to ask questions.
Additionally, Lépine said he will be inviting “sector leaders” to a summit this month to discuss measures that ensure brokerages are safeguarding funds placed in brokerage trust accounts.
“The goal of the summit is to dig deep into trust account oversight, annual financial filings, the likelihood of insurance reforms and anything related to those three items,” he said.
He did not say specifically who would be invited to the summit.
Courtney Zwicker is a digital reporter and associate editor for REM. Based in Atlantic Canada, she has over a decade of experience covering daily business news.
So, there seems to be a discrepancy between claimed amounts and the shortfall in the iPro trust account of about 20 million. This makes sense as there was a “shortfall”, not a total collapse leaving zero dollars in the account. Now, correct me if I’m wrong but insurance coverage is 8 million dollars, 4 million for consumer deposits and 4 million to cover agent commissions. This leaves a shortfall of 2.5 million or about 10%. Even if consumers are paid first, this should leave approximately 80% available to agents against their commissions owed immediately. I’d love to hear any comments and am fortunately not involved personally with iPro.
I’d also like to reiterate the absolutely shameful conduct of RECO in this matter. If it were an agent committing these acts, rest assured, action and judgement would have been swift
Rick, you are absolutely so right that if this were an agent committing the kind of thing that occurred at IPRO, there would have been swift action indeed. What happened with IPRO is beyond belief. I had said from the very beginning of this sordid mess that this would be a tale of two stories, the first story being the shortfall of millions of dollars in the IPRO trust account, the second, and equally disturbing story, was the inaction of RECO for three months and then a behind the scenes sweet deal with IPRO . If registrants are not fully compensated for the entire commissions perhaps they might have a case for a class action civil lawsuit against IPRO and RECO whose responsibility it was in the first place to ensure swift action was taken “at the earliest possible time” to prevent additional losses. RECO now has a huge challenge in front of them to gain back the trust that has been lost through this fiasco.