Apartment owner groups have joined with the Australian Consumers Insurance Lobby (ACIL) in calling for national and NSW regulators to start a “thorough investigation” into the practices of strata management firm Netstrata and its associated entities.

ACIL, the Owners Corporation Network of Australia (OCN) and the Unit Owners Association of Queensland have written to the regulators over issues identified by the ABC this week. 

“The integrity of the strata management and insurance sectors is paramount for the trust and security of millions of Australian consumers,” the groups say to the Australian Securities and Investments Commission (ASIC), Australian Competition and Consumer Commission (ACCC) and the NSW Strata and Property Services Commissioner. 

“As such, we believe it is within the purview and responsibility of your esteemed bodies to thoroughly investigate these allegations to uphold the law and protect consumers from potential exploitation.” 

The ABC report details allegations of excessive fee charging by Netstrata, facilitated through the placement of cover with its wholly owned Strata Insurance Services, and suggests the fees are not adequately disclosed. It also raises concerns over other maintenance and service relationships. 

ACIL and owners groups are seeking an inquiry into the process by which Netstrata has appointed Strata Insurance Services and other related entities, taking into account any conflicts of interest or breaches of fiduciary duty, and whether there has been informed consent from owners. 

They seek an examination of the legality of actions with respect to the Trade Practices Act, Corporations Act, Strata and Body Corporate Legislation, Consumer Law and other legislation, an assessment of whether consumers have suffered financial loss, and restitution where needed. 

ACIL Chairman Tyrone Shandiman says the Trade Practices Act prohibits unconscionable conduct and is one of the areas where breaches may have occurred.  

“There are some serious questions about whether what has occurred is conscionable and I would encourage regulators to look at that,” he tells insuranceNEWS.com.au. 

ACIL last month referred to ASIC and the ACCC 146 instances of “questionable practices” in the strata industry and, before the ABC report emerged, had opened an online survey to seek public input on sector issues. 

“We are reassured by ASIC and ACCC’s engagement with our organisation and the evidence we’ve presented and are hopeful of the commencement of a formal investigation,” Mr Shandiman said. 

OCN Executive Director Karen Stiles says the ABC report underscores the need for enhanced powers and resources for the NSW Strata and Property Services Commission, and the group will address the issue directly with Better Regulation and Fair Trading Minister Anoulack Chanthivong and the commissioner. 

“We see this as an invaluable moment to advocate for the necessary changes that will ensure the safety and rights of strata residents,” she said. 

Netstrata said yesterday that it takes its relationships with customers very seriously, understands that transparency is very important to its business and the sector and apologised to customers that may have been affected by any lack of transparency to date. 

“We are undertaking an immediate audit to ensure that any concerns that remain for our customers are answered, and we will ask NSW Fair Trading to conduct a review of our practices,” it said.  

insuranceNEWS.com.au has also sought comment from the Strata Community Association.