A new report from Toronto's auditor general has found that more than a quarter of the city's licensed holistic centres appear to be offering unauthorized services that may be sexual in nature.

The report examined the 410 licensed holistic centres operating in the city and found that 107 of them appeared to advertise erotic massages and "other services" that may violate city bylaws.

Some of the centres also used sexually explicit photographs and included suggestive descriptions about services on their web sites.

"Aside from potentially being a violation to the city's licensing and zoning bylaws, holistic centres offering unauthorized services could potentially pose an array of health, safety and community issues, including the risk of human trafficking," wrote Auditor General Beverly Romeo-Beehler.

According to the report, only 37 holistic centres were charged with bylaw violations between 2015 and 2016, and all of them continue to operate under a holistic licence.

In the wake of the findings, Romeo-Beehler is recommending that city council approve a reassessment of the bylaws covering holistic centres, professional holistic associations and body rub parlours.

This spa in a Toronto strip mall holds one of the city's 25 body rub licences. (Google)

Centres approved by professional associations

Under Toronto's bylaws, holistic centres are to be not-for-profit organizations that administer services including natural medicine, reflexology, reiki and shiatsu.

The practitioners must be licensed and the centres must also be members of an accredited professional holistic association (PHA) to receive a city licence.

However, the report found problems with several of the 10 most popular PHAs in Toronto, some of which appear to operate "on paper only."

Two of the PHAs were found to be using dubious addresses, including an abandoned building and cottage. The operators of three others were previously convicted of operating unlicensed body rub parlours.

Coun. Jim Karygiannis sat in on Friday's audit committee meeting and said he wasn't surprised by the findings in the report.

"According to the police department, I do have a lot of rub-and-tugs, if I can put it that way," he said. "They're very open about it. They're even advertising. It's something we have to deal with very quickly."

Holistic centres vs. body rub parlours

Since the 1970s, Toronto has licensed a maximum of 25 body rub parlours, which are permitted to offer non-medical and non-therapeutic services including "kneading, manipulation, rubbing, massaging, touching or stimulating a person's body."

Tracey Cook, executive director of Municipal Licensing and Standards, says the city should 'revisit the entire regime' around holistic centres and body rub parlours. (CBC)

Toronto's municipal licensing and standards director Tracey Cook said it appears the demand for those types of services exceeds the number of body rub parlours permitted by the city, and that people are using holistic licences to fill the gap.

"People who saw an opportunity to exploit something, exploited it," she said.

The licence to operate a body rub parlour costs $13,102 with a $12,660 annual renewal cost. A holistic licence costs just $270 and $148 to renew, and the city has no cap on the total number of centres.

"It's a very complicated body of work that we need to do," she added. "There was an interest in something that we've put a cap on."

The recommendation to reassess the bylaws was adopted by the audit committee Friday, but still needs to be approved by city council to proceed.