The NSW review into market impacts from banning strata managers from accepting conflicted payments has included action around broker commissions as an option. 

The Productivity and Equality Commission consultation identifies three policy interventions for discussion including strata manager self-regulation, prohibition of agents accepting commissions, and banning them from buying goods and services involving commissions. 

The third option extending further up the supply chain would require managers to negotiate arrangements that don’t involve commissions. 

“To balance the benefits with the compliance costs, restrictions of these indirect commissions could be limited to selected services, for example insurance brokers and utilities, contracts over a certain size, or just products provided by related parties of the strata manager,” the paper says. 

“This option would include providers that are related businesses, reducing the incentive for strata managers to vertically integrate with brokers to receive commissions.” 

But the paper says the NSW Government is only able to directly regulate its licensed strata managers’ behaviour, and not the payment of supply chain commissions in areas such as broking. 

“If the NSW Government were to work with the Australian Government, there may be alternative approaches,” it says. 

The lighter touch self-regulatory option would build on a Strata Community Association NSW plan to encourage members to transition away from insurance commissions, and could involve the government engaging with other industry associations. 

The option banning strata manager commissions would apply beyond SCA or other association members, extend beyond insurance and could be monitored and enforced by NSW Fair Trading. 

That option might need disclosure requirements to encourage savings being passed on and the paper warns brokers, who wouldn’t be prohibited from earning the payments, may seek to retain some or all of the manager’s commissions. 

Better Regulation and Fair Trading Minister Anoulack Chanthivong says the review will determine if a ban will lead to better value for money, higher quality services, lower costs and simpler arrangements for strata owners. 

“It’s crucial that we ensure any unintended consequences from a ban on commissions – particularly those that could adversely affect strata owners – are properly considered and examined,” he said. 

Feedback is due by December 14, with the Productivity and Equality Commission to deliver a report to the minister by February 27. 

The paper is available here.