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The state has launched an independent review into Netstrata’s practices following allegations the firm was charging excessive fees and taking kickbacks.
In mid-march, ABC news program 7.30 reported that the strata giant, which counts over 1,000 properties under management, had been using its wholly owned insurance business to charge property owners up to triple the usual rate for insurance brokerage fees.
Following the revelations, the firm’s managing director, Stephen Brell, announced that he would step aside from his role as president of the NSW chapter of the Strata Community Association (SCA).
He told the ABC that he would “go back and look at our practices and make sure we tidy them up”, admitting that the conduct of the firm made him “feel really awkward”.
The allegations came to light just weeks after the SCA released an industry-first Strata Insurance Disclosure Best Practice Guide, which in part instructs strata bodies to make “full disclosure of all commissions, conflicts of interest and the allocation of remuneration between parties”.
The review into Netstrata, which was announced by the NSW Strata and Property Services Commissioner John Minns on Thursday, 2 May, will select an independent expert to lead the process and deliver a detailed report to both the state and the company.
The report is expected to cover aspects of the firm’s business structures, processes and systems, professional practices, fees and charges, commissions and incentives, and third-party relationships. It’s slated to begin as early as 6 May 2024 and take approximately five to six weeks.
The commissioner said that further action, as a result of the report, is a possibility.
At the time of the announcement, Minns sought to impress on consumers how seriously the state is taking the matter, particularly as strata properties are increasingly housing a larger proportion of the state’s population.
“As more NSW residents choose strata living, it is essential they have confidence in the professionals they engage to manage what is often their most valuable asset,” Minns said.
“NSW Fair Trading is committed to ensuring a trusted and accountable strata sector and this comprehensive response to the issues raised demonstrates the commitment to achieving this,” he added.
Following the announcement from NSW Fair Trading, Netstrata said that it has agreed to take part in the review, and that it “wishes to work constructively with NSW Fair Trading to make positive improvements to its operations and by doing so support driving positive change within the industry”.
“Netstrata will carefully consider the results of the independent review and will have more to say at that time,” a statement from the firm read.
In January, Netstrata celebrated the topping out of its new $30 million headquarters, located in Carlton, NSW, which is hoped to be completed by June 2024.
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