By Matthew Lo -
Snapshot
- The strata management industry has been rocked by similar allegations to those investigated by the Hayne Commission with respect to the banking, superannuation and financial services industry.
- Since the Hayne Commission reforms, consumer confidence in the financial services industry has greatly improved.
- The Hayne Commission reforms, which include increased regulator enforcement and breach reporting, are a meritorious option moving forward for reform of strata management.
It was recently reported that a stalwart of a trusted industry, which has been awarded by the relevant professional association, was accused of conflicted and excessive charges in the form of product commissions. This was the story reported on 21 March 2024 with respect to strata manager, Netstrata, a founding member of the Strata Community Association (‘SCA’). These allegations are still being investigated, with a commission of inquiry announced only recently, but this echoes the investigations of the Hayne Commission (‘Hayne’) into the financial services industry almost six years ago.
Beyond the superficial, there are also substantive similarities between the misconduct reported of financial advisers and those alleged against strata managers. Hayne found misconduct by financial advisers, including overcharging in the form of ‘fee for no service’ and ‘giving advice that does not serve the client’s interests but profits the adviser’ (Hayne Interim Report, 73). Similar allegations have been made with respect to strata management: over-charging and conflicts of interest. The connection between the financial advice and strata management was expressly drawn in a 2022 report discussing strata insurance practices and the recommendations of Treasury’s Quality of Advice Review (‘Levy’) with respect to strata management.
