Commission savings should be passed to lot owners following NSW strata industry group remuneration changes, but scrutiny will still be needed, a consumer group says.

Strata Community Association NSW said this week that strata managers will no longer rely on commissions, in a change to be phased in from next year, as remuneration for insurance work shifts to separate fee arrangements.

Australian Consumers Insurance Lobby chair Tyrone Shandiman says commission savings should be passed on and it will be part of the strata manager’s fiduciary duty to ensure that happens.

“My view is that the savings will flow to consumers. That being said, there is a real risk that strata managers could still receive financial benefits via related-party structures,” he told insuranceNEWS.com.au.

“We’re already seeing instances where the strata manager owns – or is not at arm’s length from – an insurance brokerage.

“In those cases, the brokerage could continue to charge standard commissions or leave commissions unchanged, with the financial benefit flowing to the related brokerage rather than the strata management entity.” 

Mr Shandiman says the SCA NSW move appears a pre-emptive step in addressing local issues as a state government inquiry into removing strata commissions moves ahead, but there is little sign of change elsewhere.

“Across Australia, strata managers and SCA branches have been vocal advocates – and at times cheerleaders – for commissions,” he said. “I haven’t seen anything to suggest a nationwide adoption yet, though I certainly hope we get there.”

SCA NSW says some members have already moved away from commissions, while others are concerned about increased regulation, are looking for certainty, and want to restore trust and credibility with clients.

“Insurers and brokers will need to play their part to be transparent and pass on any savings,” the industry group said.

“SCA NSW will work closely with all members of the insurance supply chain to achieve this outcome.”