This article was written and submitted by former CEO of the Ontario Real Estate Association (OREA) Tim Hudak and long-time senior Ontario civil servant Frank Denton. Hudak is currently partner at Counsel Public Affairs Inc., and Denton is a senior advisor.
The collapse of iPro Realty, one of Ontario’s largest independent brokerages, has left at least an $8-million shortfall in its trust accounts and put the regulator, the Real Estate Council of Ontario (RECO), under an intense spotlight. For buyers, sellers, and real estate agents, the scandal raises urgent questions about whether their deposits are safe. When suspicion falls on an arm’s-length regulator with delegated authority from government, pressure on the Minister to act is swift. At its core, this is not just a regulatory challenge but a trust challenge — and once public trust is broken, other delegated authorities in Ontario may soon be under the same spotlight.
As a former minister responsible for RECO and other regulatory bodies, and a former assistant deputy minister who led policy and accountability for these same authorities, we have seen both sides of this made-in-Ontario model. The iPro scandal is not just about one brokerage. It is a stress test for Ontario’s entire delegated authority framework.
After the media raised the alarm and REALTORS® expressed outrage, RECO announced a comprehensive audit, and the Minister used his authority to broaden its scope and demand full transparency.In due course, the results will be made public and both RECO and the Minister will be obliged to act once the facts are in.
Ontario has seen other episodes where confidence in regulators was badly shaken. These events follow a familiar script: a scandal erupts, the media amplifies it, and pressure builds on government to respond decisively. The risk is that in the rush to reassure the public, government overshoots — adopting fixes that prove heavy-handed and create red tape that is difficult to unwind. To his credit, the Minister so far has taken a stern but measured approach, awaiting the outcome of a full independent audit before acting.
Since the mid-1990s, when RECO and other bodies were created on the “delegated authority” governance model, public trust has periodically faltered — whether due to genuine failures, perception or politics. In every case, the result is the same: heightened scrutiny, stakeholder criticism, and political pressure for government action. Sometimes the response is narrow, aimed at a single regulator, as with the Travel Industry Council of Ontario (TICO) after the collapse of Conquest Vacations in 2009 left travellers stranded abroad.Other times it widens to encompass the whole family of delegated authorities. That was the case with the Technical Standards and Safety Authority (TSSA) after the Downsview propane explosion in 2008.
Each of these reviews produced recommendations that were, for better or worse, acted upon. Regulators adapted, government practices evolved, and the cycle repeated.
When media criticism erupts, governments are often tempted to fix or scrap what seems broken.In the face of calls to bring RECO back into government - as British Columbia did in response to widely perceived mismanagement of its real estate regulator - it is worth recalling the advantages of Ontario’s delegated model.
First, it operates at no cost to taxpayers. The sector pays for its own regulation, rather than drawing on general revenues. Second, delegated authorities exclusively focus on the sector and their mandate. Instead of being one program buried within a large ministry, each has a dedicated board and CEO accountable for its performance.
Third, delegated authorities are designed to be more flexible and efficient. They are expected to operate within the spirit and intent of government policy, but without the cumbersome processes that can slow traditional bureaucracies. Finally, they bring sector knowledge to the table. Their boards and advisory committees usually blend consumer voices with business and sector expertise, helping them stay grounded in the realities of the industries they regulate.
Industry associations and consumer advocates are often the first to voice frustrations with regulators. Regulations are essential to a well governed society, but it is easy for rules to become overly burdensome, outdated, or misaligned with real risks. And like any organization, regulators can drift over time — enforcement efforts begin to miss growing risks, education falls behind, and accountability erodes.
In moments of crisis, a feeding frenzy of criticism can drive government toward overreaction and sub-optimal policy choices. Stakeholder leaders need to be measured, with an eye to the long game: enabling a regulator that understands the needs of consumers and businesses, and that focuses on the highest-risk players without impeding the good actors.
Critics of the delegated model will highlight its vulnerabilities: reduced accountability to government, limited controls, and the potential for capture by the sector it regulates. Ontario’s delegated regulators, like all regulators, are far from perfect. The Auditor General’s recent reports contain valuable recommendations for improvement at RECO and similar authorities.
The good news is that Ontario’s delegated authorities have shown they can be self-correcting. The most successful take fate into their own hands: they respond to government priorities, focus enforcement on real risks, minimize red tape, strengthen governance, and never lose sight of the consumer. That is the path to preserving both independence and public trust.
The made in Ontario model that governs RECO and similar delegated authorities was set up almost 30 years ago. It has stood the test of time. It has been copied in numerous other jurisdictions and has proven itself an effective form of regulation to protect consumers and businesses from bad actors. The iPro scandal is a reminder that this arms-length model will periodically become controversial. The Minister is on the right path: gather the facts, ground decisions in evidence, and act with conviction where reform is needed.
