The strata management industry in NSW is set to undergo significant reforms with the introduction of the Strata Managing Agents Legislation Amendment Bill 2024
which will affect the following:
- The Strata Schemes Management Act 2015 and associated Strata Schemes Management Regulation 2016;
- The Community Land Management Act 2021 and associated Community Land Management Regulation 2021; and
- The Property and Stock Agents Act 2002 and Property and Stock Agents Regulation 2022.
These changes aim to increase transparency, enhance accountability, and provide better protection for owners’ corporations.
Key Changes and Timeline
When Are These Changes Happening?
The reforms will roll out in two stages:
November 2024: Introduction of higher penalties and strengthened enforcement powers.
February 2025: New rules effective from February around transparency, disclosures and insurance commissions.
What Are the Major Changes?
Here’s a summary of the most important updates and how they impact you:
1. Improved Transparency
Strata managers will be required to:
- Ensure they obtain explicit approval from owners’ corporations at time of engagement for any commissions or training paid by a supplier or vendor providing services to strata schemes.
- Provide detailed disclosures about relationships with suppliers.
- Immediately report new business connections.
- Deliver comprehensive reports at annual general meetings.
2. Stricter Insurance Quote Requirements
Insurance processes will see tighter regulations:
- Strata managers must provide three quotes from independent providers where attainable
- An itemised breakdown and explanations of fees and commissions, including:
-
- Base premiums
- Commission amounts
- Broker fees
- Any additional charges
- Full disclosure of relationships with insurance providers will be mandatory.
- Non-receipt of commissions in the event an owners corporation arranges their insurance directly.
3. Increased Penalties
Penalties for breaches will rise significantly:
- Corporate penalties will increase to 500 penalty units (previously 100).
- Individual penalties will rise to 100 penalty units (previously 50).
- On-the-spot fines will also double.
4. Changes to Commission Rules
Strata managers can no longer receive insurance commissions if owners’ corporations and community association:
- Obtain their own insurance quotes
- Arrange payment of the insurance independently.
Agency agreements will also need to explicitly reflect these arrangements.
5. Enhanced Powers for NSW Fair Trading
NSW Fair Trading will gain new powers to:
- Investigate compliance.
- Accept enforceable undertakings.
- Appoint account examiners.
- Take stricter enforcement actions against non-compliance.
How Will These Changes Affect You?
At Strata Logic, we have always prioritised transparency and ethical practices, which puts us in an excellent position to adapt to these changes seamlessly. Here’s what we’re already doing to support you:
Transparent Disclosures
- A clear breakdown of fees is always detailed in your insurance renewal documents prior to placing insurance.
- Our business relationships are outlined in agency agreements, AGM agendas, and publicly disclosed on our website.
In addition, we have:
- Commenced a review of our agency agreements: Ensuring our agreements meet the new disclosure standards ahead of the deadlines.
- Auditing Relationships: Verifying that all partnerships with industry experts are disclosed openly to keep you fully informed.
- Increasing Training: Equipping our teams with up-to-date knowledge to continue to ensure full compliance and transparency.
What Does This Mean for the Industry?
These changes represent a significant shift toward transparency and accountability in strata management. While there might be some initial growing pains, the long-term result should be:
- Better-informed decision-making for owners’ corporations.
- Clearer and more transparent business practices.
- Streamlined insurance processes.
- Enhanced consumer protection.
Looking Ahead
At Strata Logic, we welcome these changes as an opportunity to strengthen trust and accountability within our industry. Our commitment to ethical conduct and proactive communication remains core to our business . We’ll continue to keep you informed and work closely with committees and owners to navigate these reforms smoothly.
Should you have any questions or need guidance, don’t hesitate to reach out to your strata manager. We are here to support you every step of the way.
Disclaimer: This blog provides general information and should not be relied upon as legal advice. For specific concerns related to your situation, please contact your strata manager.