Notification of fee changes for home inspectors (2018-2020)

Consumer Protection BC is an independent, self-funded, not-for-profit organization. Government has tasked us with regulating and licensing your sector. We have the legal authority to set your licensing fees and other charges. In doing so, we are required by law to recover our costs, to consult with you and to provide at least ninety (90) days’ notice prior to changing or introducing new fees.

What is happening?                                                                                   

We are notifying you that the licensing fees and other charges for 2018-2020 are changing. Our Board of Directors has approved the following fee changes that will take effect April 1, 2018.

• Annual 25% increases for licence renewal fees.
• Initial 36% increase for new licence fees and 25% increase for 2019 and 2020.
• Annual 2% increases for other charges for 2018 through to 2020.
• Fees for replacement licenses, late licence renewals and association accreditation have been eliminated.

Home Inspectors

* For more information about changes to the structure of licence renewals (effective April 1, 2018), please read the information below.

For a full listing of all proposed fee changes for your sector, please review the fee schedule for home inspectors.

Consumer Protection BC, per our Administration Agreement with the Ministry of Public Safety and Solicitor General, is mandated to set a three-year budget and therefore must set fees for all licensed businesses on a three-year cycle. We do however recognize that the current regulatory framework for home inspectors could deliver more fully on protections to consumers. We are committed to consultation with you and the Ministry to advance our shared interest in finding a more effective model for all parties. We look forward to working together to find solutions. Changes to the regulatory framework may result in reducing licensing fees in 2019 and 2020.

Why are fees changing?

Your licensing fees pay for the direct costs of regulating your sector, such as licensing, compliance inspections, complaint handling, enforcement activities, and approvals of practical trainers and evaluators and educational providers, as well as indirect costs like IT, finance and accounting, office rent, communications, stakeholder relations, etc. Every effort is made to control and manage the cost of regulating your sector. However, with recent changes to the law and related shifts in our costs, significant increases to licensing fees are unavoidable.

Changes to the law, which came into effect on September 1, 2016, expanded our responsibilities for overseeing your sector, as we took on responsibility for administering new and expanded requirements for both new and existing home inspectors. Therefore, to approach cost recovery by 2020, we are increasing annual licensing fees by 25% over the 2018 to 2020 period. We are also increasing other charges by 2% over this period. As we move toward achieving cost recovery for your sector we will continue to assess our costs, including the impact any further changes to the law may have on our costs and thus your licensing fees.  Under a scenario where future fee changes are required, we will consult with you prior to making any changes.

Examples of Consumer Protection BC’s responsibilities for new and expanded requirements for home inspectors include:

• Assessing qualifications (educational, practical training and assessment requirements) for new home inspector applicants
• Administering new and expanded requirements for existing home inspector licensees (e.g. expanded requirements for home inspector contracts with consumers and inspection reports)
• Assuming responsibility for all consumer inquiries and complaints for your sector (a function previously shared with the home inspector associations); and

You will also notice a new structure for licence renewal fees, which will be effective for April 1, 2019 for home inspectors. You will pay a lower fee if you renew your licence at least two (2) weeks before it expires. This means that you will pay less if you renew your licence at least two weeks prior to your licence expiry, starting with 2019 licence renewals.

We will also no longer be charging late fees. If you don’t renew your licence by its expiry date, you will need to submit a new licence application, which costs more money.

The purpose of these changes is to encourage you to renew your licence before its expiry date. This will create efficiencies when we process licence renewals.

If you want to learn more about the fee review process to date, please read the fee review consultation document.

What did we hear from you?

We heard from 39% of licensees on our e-mailing list. Our goals for the consultation were to make licensees aware of proposed licence fee changes and to solicit feedback on those proposed changes and our process. Of those licensees who responded to our survey, 54% indicated they understood that we were proposing to change licensing fees and other charges. Further, 37% of respondents indicated they understand how we use their fees to regulate your sector.

The emergent themes from the feedback we received can be summarized as follows. With respect to these themes, we have provided the following context and clarification in italics:

Size of the proposed fee increases:

1. Respondents expressed a general concern with the proposed fee increase, with reasons varying from general disagreement to concerns over the size of the increase. Respondents also described the proposed fee increase as being “unreasonable.”
2. Respondents report feeling that home inspectors are not receiving fair “value” for their licensing fees or that they are not proportional to the services being provided by the regulator. This theme has often been linked to a comparison, respondents are making between the cost of a BC home inspector licence and other license fees (for example a driver’s licence, a firearm licence or an Alberta home inspector licence).
3. A minority of respondents report understanding that fee increases are necessary but would like to see smaller increase(s).

The fee increases through to 2020 will gradually bring the home inspector sector into a cost recovery position. Consumer Protection BC is mandated to recover costs through licencing fees and other charges. Cost recovery for the home inspection sector has been an on-going challenge since regulatory authority was delegated to Consumer Protection BC in 2009. Except for 2013, the annual fee revenue generated by this sector has not provided for the recovery of costs. The gradual increase is designed to allow for flexibility should the cost associated with the home inspection sector shift with further regulatory changes. Consumer Protection BC is a regulator and is separate from government. As an organization mandated to recover costs, the licensing fees and other charges represent the cost of regulation.

The current fee model:

1. While the funding fee model (where a proportional portion of fees for all sectors contribute to the general consumer protection functions mandated to us by government) is not new, many respondents expressed disagreement with their fees paying for general consumer protection/our work related non-licensed sectors.
2. Some respondents proposed alternative fee models for future consideration, including:
   • A sliding scale fee model (based on inspection volumes)
   • Different fees for urban vs rural areas (linked to the potential customer base)
   • A fee based on compliance history (with higher fees assessed against home inspectors with compliance issues)
3. While some respondents did indicate their interest in assessing the possibility of a future indexed fee model, a sizeable group of respondents refused to provide data on the number of annual inspections performed (this survey question was asked of the respondents to inform such a future discussion).
4. A small number of respondents commented that many of Consumer Protection BC’s allocated costs are largely related to new entrants – thus, those costs should be born largely by new applicants, while licensing fees for existing home inspectors should be tied to inflation.

Consumer Protection BC is open to and would welcome proposals and a discussion of future fee model options. Should the home inspector sector come to a consensus and propose an alternative fee model that demonstrably allows for cost recovery, Consumer Protection BC would be happy to consider and evaluate such a model.

The fee review and consultation processes:

1. A number of respondents, including the submission from one of the professional associations, question the methodology, accuracy, and validity of our funding model costing process, which we used to arrive at the proposed fees increases.
2. A number of respondents questioned the extent to which the consultation process was truly consultative if our mandate to recover costs through fees is non-negotiable.

Consumer Protection BC is mandated by law to recover costs. The requirements for consultation and notification are also mandated under law and the process used for fee setting has been in place since the creation of Consumer Protection BC in 2004 and has not altered.

Impact of proposed fee increases:

1. Many respondents expressed concern that the cost of licensing may become a deterrent for new home inspectors entering the sector as the fees will be significant for a new home inspector who is in the process of building their business.
2. Many respondents expressed concern that real estate market conditions in some regions (where some homes are being sold without a home inspection which impacts a home inspector’s bottom line), combined with proposed fee increases, will drive some home inspectors out of business.
3. Respondents also indicated their belief that the increase in licensing fees will have to be passed onto consumers, which will contribute to an already challenging marketplace for home inspectors (as inspections aren’t mandatory).

Consumer Protection BC is aware of the difficulty that current market conditions are causing for some home inspectors. As a result, to achieve cost recovery, Consumer Protection Bc has taken a gradual approach to fee changes from 2018 through to 2020 in an attempt to soften the impact on home inspectors as much as possible, while allowing for flexibility should the costs of regulating the sector change significantly over the 2018 to 2020 period.