The New South Wales government has issued a warning that breaches of new strata transparency laws could result in penalties of up to AU$110,000 (US$69,126), as it continues to evaluate further action on commissions.
Enforced by NSW Fair Trading, the laws, which took effect this month, mandate detailed disclosures of insurance quotes, including commissions and broker fees. Strata managers must also disclose any relationships with suppliers and developers and the nature of those affiliations. Additionally, they will no longer be permitted to receive commissions if an owners’ corporation arranges insurance independently.
“These reforms are about ensuring transparency and accountability for everyone living in strata communities,” Better Regulation and Fair Trading Minister Anoulack Chanthivong said.
“Strata managers have an obligation to act in the best interests of their clients, which includes maintaining the trust of owners corporations. These reforms will improve oversight and ensure strata managers’ practices are open and transparent,” he added.
The government has indicated it is still considering further measures regarding commissions, including a potential ban.
Consultations, which commenced last year, have involved a range of stakeholders, including strata managing agents, insurers, brokers, owners, legal experts, and academics. The government intends to review advice from NSW Fair Trading before engaging in further discussions on proposed reforms.
The new laws follow scrutiny over disclosure failures and conflicts of interest in the sector. An investigation by Australia’s ABC alleged that Netstrata, through its subsidiary Strata Insurance Services, charged brokerage fees significantly above industry norms. This led to an investigation by Fair Trading, with consultancy McGrathNicol engaged to examine the company’s practices, with further inquiries ongoing.
With more than 87,000 strata schemes and 1.2 million residents in strata housing across NSW, the government is also advancing additional legislative reforms.
These proposals, currently before parliament, aim to enhance developer accountability by ensuring initial strata levies are accurate and will introduce financial hardship provisions and protections against unfair contract terms.
“We will be working to educate the industry on its obligations and monitor compliance with NSW strata law,” NSW Fair Trading commissioner Natasha Mann said.
