The NSW government has asked the state Productivity and Equality Commission to review the market impacts of banning strata managing agents from accepting commissions or other conflicted payments.

Better Regulation and Fair Trading Minister Anoulack Chanthivong says the regulatory environment should stop managing agents from being incentivised to act in their own interests rather than the interests of owners.  

“We also need to make sure any unintended consequences from a ban on commissions – particularly those that could adversely affect strata owners – are properly considered and examined,” he said.

The commission will consider whether prohibiting managing agent commissions will lead to better value for money, higher-quality services, lower costs and simpler arrangements, while also looking at impacts on business models and competition.

It will examine case studies, consult with owners and stakeholders, prepare a public consultation issues paper and report to the minister by February 27 next year.

Property services and strata commissioner Angus Abadee says the government has this year introduced reforms to increase accountability and better protect owners.

“This review will ensure we continue to build on these reforms to ensure strata managers are acting in the best interests of consumers,” he said.

NSW Fair Trading has already held talks about removing the commissions, amid scrutiny on the sector and concerns over intermediary charges.

Reforms legislated last year increased remuneration transparency, but Mr Chanthivong has previously indicated the government is looking to go further.

The strata sector has said commissions subsidise lower management fees, while insurance brokers have pointed out strata managers play a vital role in dealing with issues affecting buildings and responding to claims.

Strata Community Association NSW says it will work with the government and the productivity commission to ensure any reforms strengthen consumer protections without undermining the sector’s viability. 

“We believe any changes must be evidence-based and data-driven because of the potentially significant impacts on the financial and operational structure of the strata insurance market and the long-term sustainability of the strata sector,” president Robert Anderson said.

The review is an opportunity for further input and consultation, paving the way for increased transparency, the association says.

NSW has more than 87,000 strata schemes, which include most apartments, townhouses, villas and duplexes. More than 1.2 million people live in strata arrangements.