Consumer groups have urged Federal Treasurer Jim Chalmers to launch a public inquiry into the strata management industry following last night’s Four Corners program.

They say a probe led by the Australian Competition and Consumer Commission or the Productivity Commission should examine “questionable and unethical remuneration models”, inadequate protections, financial hardship and debt recovery practices, and a lack of transparency.

“Given the scale of the issues at hand and their impact on a significant portion of the Australian population, it is imperative that this inquiry be established to ensure fairness, transparency and accountability within the industry,” the groups say in a letter to the Treasurer.

The letter is from the Owners Corporation Network of Australia, Choice, the Australian Consumers Insurance Lobby, the Unit Owners Association of Queensland, the Financial Rights Legal Centre, Financial Counselling Australia, the Queensland Consumers Association, NQ Strata Action Group and Mortgage Stress Victoria.

Earlier this year, the Consumers Insurance Lobby presented the ACCC and the Australian Securities and Investments Commission with 146 examples of “questionable practices” and called for investigations.

Lobby chair Tyrone Shandiman says there are widespread concerns over excessive fees and kickbacks, potential conflicts of interest and the unlawful transferring of insurance policies without the client’s consent.

“We are also concerned about conflicts of interest where a single company owns the strata management company, insurance broker, building company and other service companies,” he said today. “We question whether the recommendations of companies within the supply chain are genuinely in the best interest of the consumer or whether they were instead benefiting those in the supply chain.”

An ABC report earlier this year focused on problems in the NSW strata sector and excessive fee charging by management company Netstrata.

The report led to the introduction in state parliament last month of proposed tougher rules on transparency and compliance.

Mr Shandiman says NSW is making progress with reforms but it remains to be seen whether they will resolve the issues, and problems are prevalent around Australia.

“While rolling out similar laws across the country would benefit consumers, I believe the most impactful change would be better-resourced regulation,” he told insuranceNEWS.com.au. “Regulators need to proactively address bad actors rather than [respond] reactively under an underfunded system.”

Financial Rights says it’s “deeply concerned” about strata management issues, including insurance.

“Quite simply, strata managers should not be getting paid by an insurer for recommending their products,” acting CEO Alexandra Kelly said. “Conflicted remuneration should not be allowed to continue, as even when disclosed, we already know that disclosure doesn’t alert people to the conflict.”

The group has called for the ACCC to examine the industry, and for state governments to be vigilant in making sure consumer rights and interests are protected. 

The Owners Corporation Network of Australia says government should step in and ensure there is a robust framework protecting consumers.

“The lack of transparency and accountability in the current system has left many of us vulnerable,” executive director Karen Stiles said. “We need a thorough inquiry that not only highlights these issues but also leads to substantial reforms.”