The NSW government has warned penalties of up to $110,000 will apply for breaches of strata transparency laws that took effect this month, as it continues to consider further action on commissions.

The laws, to be enforced by NSW Fair Trading, require detailed breakdowns of insurance quotes, including commissions and broker fees, and disclosure of any connections with suppliers and developers and the nature of those relationships.

Strata managers will no longer be able to receive a commission 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 today.

“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.”

Mr Chanthivong previously said the government would consider further action on commissions, including a possible ban. Consultations started last year.

“The government has asked the NSW Fair Trading commissioner to provide advice on how the strata sector could transition away from commissions,” a spokesman for the minister told insuranceNEWS.com.au today.

“NSW Fair Trading has met with sector stakeholders, including owners, strata managing agents, insurers, brokers, lawyers and academics, to explore how this ban could be implemented. The government will consider this advice and consult with stakeholders on any proposed reforms.”  

Parliament passed the strengthened transparency and oversight laws in September after disclosure failings and conflicts of interest were highlighted.

An ABC report focused on excessive fees charged by strata management business Netstrata.

Fair Trading engaged consultancy McGrathNicol to prepare a report on Netstrata and has continued to investigate complaints about the company’s conduct.

NSW has more than 87,000 strata schemes and more than 1.2 million people living in strata arrangements.

“We will be working to educate the industry on its obligations and monitor compliance with NSW strata laws, with penalties of up to $110,000 for those flouting the law,” Fair Trading commissioner Natasha Mann said.

The government has a further tranche of reforms before parliament, stemming from a previously scheduled strata legislative review. The proposed laws will increase developer accountability to ensure initial strata levies are accurate, so owners are not hit with higher fees once they move in, and will add financial hardship provisions and unfair contract term protections.