An ACT parliamentary review has recommended strengthening strata manager commission disclosures and weighing a NSW inquiry model, while also proposing action to address insurance problems in mixed-use buildings.

“The committee considers that while commissions are presently part of the way many strata managers conduct business, more transparency is required in the interests of owners,” the report says. 

Making existing requirements more explicit and requiring a breakdown of commissions would offer greater transparency, it finds. 

The ACT Standing Committee on Legal Affairs began inquiring into the management of strata properties in January last year. It received 128 submissions and held public hearings.  

Its 33 recommendations include mandating strata managers disclose any conflicts of interest and commissions received and requiring that they provide a written explanation of commission arrangements to owners when seeking approval for insurance quotes. 

The Government should also consider “whether the model outlined in the NSW Productivity and Equality Commission’s strata commissions review would be appropriate for the ACT”, it says. 

The NSW report released in March proposes banning managers from receiving commissions, with a three-year transition period. It also recommends restricting supplier-intermediaries, including brokers, from accepting commissions for strata-related work. 

The ACT inquiry also heard evidence about mixed use buildings experiencing soaring premiums when tenants included businesses such as tobacconists or tattoo parlours. 

“While it is understandable for insurance to pool risk across all the occupants of a building, it may not be appropriate for individual households to be held liable for commercial premises over which they have no control,” the report says. 

It recommends the Government explore options to ensure insurers are required to provide separate insurance policies for different users of the same building. 

The Australian College of Strata Lawyers and the Strata Knowledge consultancy say the ACT needs to go further than boosting disclosure and should prohibit conflicted remuneration and restrict supply-chain commissions. 

“You cannot disclose your way out of a fiduciary conflict; you can only avoid it or remove it,” Strata Knowledge director Nicole Johnston said. “When jurisdictions and independent reviews converge on the same evidence-based answer, Australia has the opportunity to deliver strata owners a coherent national framework.”  

A review of strata legislation is also underway in Victoria, with an expert panel final report provided to Consumer Affairs Minister Nick Staikos in December.  

“The government is carefully considering the final report and will have more to say about the review in due course,” a Department of Government Services spokesperson told insuranceNEWS.com.au.