The NSW government will introduce strata laws aimed at improving commission disclosure and weeding out “bad behaviour” in the sector.

Increasing the maximum penalties and penalty infringement notice amounts around strata managing agents’ obligations to disclose commission information are among the planned changes.

The government also intends to ban agents from taking a commission when they do not play a role in finding the best deal for strata residents; toughen conflict of interest disclosure requirements; and strengthen NSW Fair Trading’s enforcement and compliance powers.

Consultation on the draft laws with key stakeholders including the Owners Corporation Network and Strata Community Association will start in the coming weeks.

A stakeholder engagement meeting today to discuss broad issues in the strata sector – a regular forum facilitated by the strata and property services commissioner – detailed the changes.

“Stakeholders were briefed on the recently announced proposed changes to laws around disclosure and conflicts of interest and will be given the opportunity to provide feedback,” a NSW Fair Trading spokesperson told insuranceNEWS.com.au.

The reforms come after some in the strata sector were called out for charging excessive fees for insurance services without fully disclosing details of the arrangements.

Issues over fees and arrangements were exposed in an ABC news report earlier this year that focused on one company and led to more complaints about the sector, including from the Australian Consumers Insurance Lobby.

The NSW government says the proposed law changes will “impose greater disclosure obligations and stamp out bad behaviour in the strata sector. Recently the behaviour of a small number of managing agents has put a dent in public confidence around apartment living.” 

Better Regulation and Fair Trading Minister Anoulack Chanthivong says the reforms are critical to lifting confidence around investing and living in strata schemes.

“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,” Mr Chanthivong said.

The state parliament will consider the new laws later this year, the government said.

The National Insurance Brokers Association backs the proposed reforms, announced this morning.

“These changes will ensure that all stakeholders in the strata sector operate with integrity and accountability,” NIBA CEO Richard Klipin said. “We believe that increased transparency will build greater confidence among strata owners and residents.”

Strata Community Association NSW, the peak body for the strata sector in the state, also backs the changes. “The SCA has long advocated for sensible and progressive regulation in NSW that will improve practices across the entire strata sector – for the benefit of consumers and the sector alike,” it said.

“SCA NSW has been working closely with the NSW government to address key issues in the strata sector, including in relation to conflicts of interest, disclosures and commissions.”

Strata Community Insurance MD Paul Keating supports change but voiced concern over what “best deal” means. 

“If that means the cheapest, that would be a real concern because it should be based around value,” he told insuranceNEWS.com.au. “If there is an open claim, the better choice may be to stay with the current insurer rather than chase cheaper premiums.”

He believes the reforms will lead to more distribution choice for owners’ corporations and strata managers and he hopes “what it leads to is greater transparency in strata management and broking transactions”.

"Most strata managers are doing the right things by their clients," he said.

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