Government and strata sector make big moves to clean up act

A recent scandal involving one of the nation’s biggest strata management firms has led the NSW government as well as the industry’s advocacy body to mandate a change in practices.

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In mid-March, ABC news program 7.30 broke a report on the practices of NSW-based industry giant Netstrata which counts over 1,000 properties under management revealing that the firm had been using its wholly owned insurance business to charge property owners up to triple the usual rate for insurance brokerage fees.

The fallout was swift, with the state launching an independent review, while the firm’s managing director, Stephen Brell, announced that he would step aside from his role as president of the NSW chapter of the Strata Community Association (SCA).

Now, the state government has announced that new laws will be coming for the sector, while the national arm of SCA has appointed an independent chair to oversee complaints from consumers and monitor conduct in the sector.

Under the government’s proposal, which will enter a consultation process that involves SCA as well as other stakeholders, the strata managers will face increased penalties for wrongdoing and more stringent disclosure agreements to stamp out what the government called “bad behaviour” in the industry.


Key changes proposed include:

- Increasing the maximum penalties and penalty infringement notice amounts for existing agent obligations to disclose information about commissions.
- Strengthening the conflict-of-interest disclosure requirements.
- Banning agents from receiving a commission on insurance products when they don’t play a role in finding the best deal for residents.
- Strengthening NSW Fair Trading’s enforcement and compliance powers.

A draft of the new laws are expected in the coming weeks, with the government stressing it intends to move quickly on the matter to avoid further eroding consumer confidence at a high-stakes time for apartment living.

“We have a housing crisis in NSW and solving it means we need to build more high-quality, higher density housing. More than 1.2 million people already live in strata communities in NSW, and that number is set to grow under the government’s comprehensive plan to build a better NSW,” a statement from the government read.

Minister for Better Regulation and Fair Trading, Anoulack Chanthivong, further emphasised “these reforms are critical to supporting confidence in investing and living in strata schemes”.

Chanthivong noted that the task was as much a public perception exercise as a legislative one.

“We want to change the perception that strata managing agents easily, and readily, take advantage of owners by significantly increasing the consequences for those who do the wrong thing,” he said.

SCA’s NSW chapter has said that it “strongly supports” the new measures, while the national arm has announced new progress on its “six-step plan to ensure confidence”. Tackling the plan’s second requirement, SCA has appointed Stephen Phillips as the independent chair of the SCA Professional Standards and Membership Board Advisory Group, which is tasked with handling all complaints against SCA members.

SCA CEO Alisha Fisher said that Phillips’ appointment was an important step in giving consumers and members “faith in the robustness of our member code”.

With Phillips in the role, Fisher commented that “any person at any time can contact SCA through our process and make a complaint against an SCA member and know that an independent person will evaluate and action their complaint as appropriate”.

Other steps in the plan include allocating additional resources to the complaints process and improving consumer accessibility, producing a “rigorous best practice guideline that clearly addresses conflicts of interest”, and offering additional support to businesses aiming to improve practices.

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