NAT: Urgent call for industry-wide inquiry into strata industry practices

This article provides the latest update about a call for an industry-wide inquiry into strata industry practices.

Strata industry leaders are calling for an urgent industry-wide Federal Government inquiry into widespread strata industry misconduct.

Consumer advocacy group, Australian Consumer Insurance Lobby (ACIL) is leading the call after identifying and reporting 146 cases of alleged misconduct to the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC).

ACIL Chairperson and Managing Director of Strata Insurance Solutions, Tyrone Shandiman says there are widespread concerns over excessive fees and kickbacks, potential conflicts of interest and the unlawful transferring of insurance policies without the client’s consent.

“We’re seeing a trend in consumers being shifted from brokers who take the standard 20% commission to new brokers who are charging the standard 20% commission plus an additional broker fee of up to 30%.”

“We believe almost a quarter of consumers across Australia are affected and have likely been moved to these remuneration models unlawfully without informed consent,” Tyrone says.

“We estimate that consumers have paid over $240 million more than they should have over the past six years. It is very frustrating to see this practice occur systematically.”

“We are also concerned about conflicts of interest where a single company owns the strata management company, insurance broker, building company, and other service companies. We question whether the recommendation of companies within the supply chain are genuinely in the best interest of the consumer or whether they were instead benefiting those in the supply chain.” ACIL and many other consumer groups want to see urgent change.

“We want to see the Federal Government direct the ACCC or other appropriate body to conduct a public inquiry. We need legislative changes introduced to protect consumers and strata management companies who are doing the right thing.”

“There is now three million strata units across Australia, these consumers need to be protected,” Tyrone says.

“We want to see the industry prioritise transparency, accountability, professionalism and ethical practices to build trust and confidence among consumers.”

Unit owners can protect themselves by seeking alternative quotes and becoming familiar with the remuneration structures and potential conflicts of interest.

“Strata consumers often rely on strata managers during the insurance purchasing process, making them more vulnerable.”

“It is important for consumers to understand where there is a significant variance from the standard remuneration models, being a 20% commission, they should ask questions about why they have been placed on this remuneration model and look at whether there was appropriate authority when they were moved to this model.”

“Although there are some bad actors in the industry, many strata managers operate with integrity, professionalism, and strong ethical standards. We want to reassure consumers that there are reputable options available.”

Further information about Australian Consumer Insurance Lobby (ACIL) can be found on the Australian Consumer Insurance Lobby website.

This post appears in Strata News #712.

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