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A strata management company has been under investigation by NSW Fair Trading following public concerns about excessive fees, conflicts of interest and undisclosed referral commissions.
NSW Fair Trading has released an independent report by McGrathNicol, uncovering potential breaches by strata management company Netstrata, including failure to obtain multiple quotes for major expenses and non-disclosure of commissions.
Commissioned as part of a broader investigation into Netstrata, the report reviewed 60 strata plans and identified multiple contraventions of the Strata Schemes Management Act 2015.
The report found seven instances where Netstrata failed to obtain at least two quotes for expenses exceeding $30,000, violating section 102, and two cases of non-disclosure of commissions, breaching section 60.
Further scrutiny revealed possible undisclosed commissions received by Netstrata from debt collection agency Strategic Collection Services Pty Ltd.
McGrathNicol’s report also flagged conflicts of interest, including personal relationships between Netstrata employees and suppliers and extensive reliance on suppliers with the company’s commercial ties.
Additional concerning practices include charging premiums to strata plans that did not use Netstrata’s in-house insurance broker, Strata Insurance Services (SIS), and a remuneration structure that appeared to incentivise strata managers to impose additional fees.
NSW Fair Trading commissioner Natasha Mann emphasised the gravity of these findings.
“At the heart of this matter is that strata managers have a legal duty to act in the best interests of the people they work for – the owners’ corporation,” she said.
“The disturbing practices described in this report suggest that Netstrata does not appear to have always done this. On multiple occasions, Netstrata’s own interests appear to have trumped the interests of the people it had a duty to act on behalf of.”
The NSW government has since introduced legislative reforms to strengthen transparency and accountability in the strata sector.
However, the McGrathNicol review did not consider Netstrata’s conduct under these new laws.
Fair Trading’s broader investigation into Netstrata continues, focusing on additional misconduct allegations, including complaints from affected strata schemes.
The probe is being led by Fair Trading’s newly established Strata and Property Taskforce.
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