Fit and proper consultation 2022

Carrying out a fit and proper assessment has always been part of REA’s regulatory framework. We have prepared the guidelines to clarify for new applicants and real estate professionals seeking to renew their licences what factors we consider relevant when making that assessment. The guidelines provide transparency for the public about this aspect of the regulatory framework, and what REA, as a conduct regulator, expects of real estate professionals.

No, that’s not why the guidelines have been prepared. REA has always considered whether someone applying to be granted or to renew a real estate licence is a ‘fit and proper’ person, as required under section 36 of the Real Estate Agents Act. The guidelines clarify what factors are considered relevant when making that assessment.

There are ways in which guidelines will help make the decision-making process clearer and more straightforward. For example, if something came to light about an applicant’s history which was a cause for concern in terms of their ‘fit and proper’ status, and they hadn’t been upfront about it in their application, that lack of disclosure might lift the level of concern even higher. By publishing the guidelines we are able to be clear about our expectations on applicants and help all applicants and the public to understand the process. We want applicants to be forthcoming with their information so that we can assess their application as a whole.

REA has always looked at whether an applicant is fit and proper to hold a licence. Under section 36 of the Real Estate Agents Act the Registrar must be satisfied that any applicant for a licence is 18 years old, has the prescribed qualification, is not ineligible to hold a licence (through disqualifying convictions) and is a fit and proper person.

The proposed guidelines record factors that are already relevant to this assessment and as such, they do not represent a significant departure from current practice. Rather they provide a single source of relevant information as to factors and principles that will be drawn on when an application is assessed. The guidelines make it easier for applicants and the wider public to understand what we take into consideration. 

It’s important to note that guidelines are not a precise checklist that must be met to be considered ‘fit and proper’, nor are they an exhaustive set of rules. They are guidelines which will be applied flexibly to help with assessing each particular application under consideration, as part of the broader application process.

As a regulator, REA continually assesses the regulatory framework it oversees and operates within, in the context of operating conditions for licensees, feedback from consumers, judicial consideration of decisions and many other factors. We are always looking for ways to improve the performance of the system and our own operations. In this particular instance, informed by engagement with sector and recent cases, we determined that, by preparing these guidelines, we had an opportunity to increase the clarity, consistency and transparency of this aspect of the regulatory framework. By doing this, we could improve the system for the benefit of licensees, decision- makers within REA and regulatory bodies we work with, and, ultimately, the public of New Zealand. There are naturally a number of steps to successfully making changes of this kind, including this public consultation period. We are very pleased to have reached this point and look forward to publishing the final guidelines very soon.

No, from a process point of view there is nothing different to do. You still need to apply using the REA form and provide all the information here. Our licensing team will work with applicants to seek any further information that may be required to support an application.

REA expects all applicants and licensees to provide the Registrar with as much relevant information as possible and to be forthcoming in the application process. The guidelines should help applicants and licensees identify if there are things that ought to be disclosed as part of the application process. But all applications are considered as a whole – it is not a simple checklist of criteria to be met, but rather part of a balanced assessment that weighs up all the information provided including reference checks and criminal history.

Trust and confidence is an important part of being a real estate professional. People are entrusting their property or business to a real estate professional or relying on information from licensees to make significant financial decisions. People who deal with real estate professionals need to have confidence that there is nothing in the person’s character that could call into question or raises a risk that the professional should not be dealing with significant sums of money or selling someone’s property or business.