Under RESA, a managing broker becomes aware that a licensee in the brokerage has failed to disclose a conflict of interest in a transaction. What is the managing broker's obligation?

Q: What is the correct answer to: Under RESA, a managing broker becomes aware that a licensee in the brokerage has failed to disclose a conflict of interest in a transaction. What is the managing broker's obligation?

The correct answer is The managing broker must take immediate steps to ensure the conflict is disclosed and may need to report the conduct to BCFSA. Option B is correct because managing brokers have a statutory duty under RESA to supervise licensees and ensure compliance with the Act and BCFSA rules. Upon becoming aware of an undisclosed conflict of interest, the managing broker must take immediate steps to ensure proper disclosure is made to all affected parties. Depending on the severity of the misconduct, the managing broker may also be required to report the conduct to BCFSA.

Q: What background knowledge is needed for this Agency & Professional Ethics question?

Under RESA, the managing broker is the compliance gatekeeper for the brokerage. Their duties include supervising licensee conduct, reviewing transactions for compliance issues, managing trust accounts, and ensuring that all RESA requirements are met. When misconduct is discovered, the managing broker must act promptly — failing to do so can result in the managing broker facing their own disciplinary proceedings before BCFSA, including fines, licence suspension, or cancellation.

Q: What is a good way to remember the answer to this Agency & Professional Ethics question?

The managing broker's obligation is summed up as MAI: Must Act Immediately. When aware of a compliance issue, waiting is not an option. Act now, disclose now, report if needed now. When the exam asks about a managing broker's response to licensee misconduct, the correct answer always involves immediate action. Reject answers that suggest waiting, ignoring, or delegating back to the licensee without oversight.

Q: What exam tip applies to this Agency & Professional Ethics question?

RESA holds managing brokers to a high standard of active supervision. If the exam describes misconduct that the managing broker knows about, the correct response is always immediate intervention, not passive observation or post-transaction review.

Q: How does this Agency & Professional Ethics concept apply in real world practice?

A managing broker in Surrey discovers that one of their licensees has been facilitating offers from a personal friend on a listed property without disclosing the relationship. The managing broker immediately contacts the seller to ensure full written disclosure, documents the compliance failure, provides additional training to the licensee, and files a report with BCFSA as required.

Question

Agency & Professional EthicsBCHARD

Under RESA, a managing broker becomes aware that a licensee in the brokerage has failed to disclose a conflict of interest in a transaction. What is the managing broker's obligation?

Answer Options

A

The managing broker may choose to address the matter after the transaction closes

B

The managing broker must take immediate steps to ensure the conflict is disclosed and may need to report the conduct to BCFSA

C

The managing broker has no obligation as conflicts of interest are the individual licensee's responsibility

D

The managing broker must cancel the transaction and refund all deposits