Allegations of a lack of transparency have rocked the strata management industry in New South Wales. Reports have surfaced about some companies benefiting from significant undisclosed commissions, prompting the NSW Strata Commissioner to launch an independent inquiry into industry practices surrounding fees and commissions. Amid this controversy, the importance of transparency—especially concerning financial dealings—has taken centre stage.
In response to these issues, Minister for Fair Trading Anoulack Chanthivong has announced reforms aimed at addressing the industry's transparency concerns.
While the transparency controversy initially emerged in New South Wales, it highlights a broader issue inherent to the broader strata management industry in the Asia-Pacific region.
The administrative nature of the strata manager's role, which typically involves limited onsite presence, contributes to potential misconceptions and transparency concerns. This, coupled with a widespread misunderstanding of the specific responsibilities' strata managers are engaged to fulfill, can lead to communication gaps and trust issues.
The situation underscores the need for clearer industry-wide standards and improved communication about the scope and limitations of strata management services, regardless of geographical location.
The Importance of Transparency in Strata
For many strata property owners, the issue of undisclosed commissions strikes at the core of the client-manager relationship. Transparency in financial dealings assures strata owners that their funds are being managed responsibly. This builds trust, which is essential for long-term client relationships.
Strata management companies that prioritise transparency are viewed more favourably in the market as a reputation for honesty and integrity attracts more clients and retains existing ones. Moreover, clear communication about fees, commissions, and easy access to financials helps prevent misunderstandings and disputes, leading to smoother operations and happier clients.
Seizing an Opportunity for Change
While the inquiry's details are still unfolding, some are hopeful it may help rebuild confidence.
"The investigation has the potential to shed light on agency practices, allowing ethical firms to demonstrate their commitment to transparent operations and client service," said Grant Crawford, Executive General Manager of Strata Products at Urbanise.
Crawford believes prioritising transparency is paramount for strata agencies because, unlike building managers, strata managers have limited onsite presence due to the nature of their role.
“Without a physical presence onsite, owners often don't understand strata managers' daily tasks and complexities, like navigating approvals, compliance obligations, mediating disputes, and following up with trades—which are all time-consuming and often complex.”
Crawford highlighted several factors that have significantly increased the complexity of strata management in recent years. These include new planning approval pathways, severe weather events leading to more complex insurance claims, the pandemic requiring compliance with evolving health orders, and tightened preventative fire compliance measures.
These developments have added layers of complexity to strata managers' responsibilities, requiring them to navigate intricate approval processes, fire safety compliance, handle more complex insurance claims, manage residents' heightened stress levels, and oversee increasingly complex remedial projects.
“There are two critical aspects to address: strata owners need to be provided with transparency on what their fees cover to feel secure, and strata managers need to be able to charge effectively for their time.” Crawford said.
The Role of Technology in Enabling Transparency
Technology can play a significant role in assisting both parties with transparency. Platforms like Urbanise provide the level of transparency needed to build and maintain long-term trusted relationships, allowing owners to see exactly how their funds are being used.
Strata management involves numerous tasks, from budgeting and maintenance to dispute resolution. Urbanise Strata provides for the recording and tracking of these tasks, providing owners with a clear history of actions taken. This transparency helps owners understand the value provided by their strata manager.
“In the past, the technology to enable owners to go online and access information and financials for their strata scheme wasn’t available, and many strata agencies still operate without an owners' platform. Most strata schemes operate on a fixed base fee and additional service charges for tasks not covered by the fixed based management fee. However, many of our clients expressed that they were nervous about charging correctly for additional tasks prior to migrating to Urbanise, as they didn’t have an easy way for staff to record their time against these tasks.’ Crawford said
“Our platform enables strata managers to accurately record and charge for their time, ensuring owners understand exactly what they are paying for. This transparency helps alleviate concerns about hidden fees. Furthermore, our platform provides strata owners real-time access to financial data like ledger entries and income statements. This complete visibility is key," Crawford explained. By giving clients control and flexibility to view live transactional data, Urbanise promotes an environment of openness and accountability from day one.
Unlike traditional systems that rely on periodic updates, Urbanise Strata provides live data updates via its owners portal. This ensures that the financial information available to owners is always current, reducing the chance of discrepancies and misunderstandings. Urbanise Strata can also automate the generation and distribution of financial reports. These reports can be customised to meet the specific needs of the owners, providing them with clear and concise information about their strata’s financial health.
Additionally, our self-service portal, Community by Urbanise, empowers owners by giving them visibility and centralises communication where all stakeholders can access important documents, updates, and communication threads. This reduces confusion and ensures everyone is on the same page.
Urbanise Strata’s meeting module, powered by StrataVote, enables virtual meetings and electronic voting, making it easier for owners to participate in decision-making processes. This increased involvement fosters a sense of community and ensures that decisions are made transparently. Electronic voting and virtual meeting platforms can provide audit trails, showing who voted and how decisions were reached. This transparency in the decision-making process builds confidence among owners.
As the strata transparency issues continue to unfold, companies like Urbanise are hopeful a renewed industry-wide focus on ethical, transparent conduct will emerge. "Rebuilding trust through transparency will be crucial for strengthening confidence across the entire strata sector moving forward," Crawford stated.
Are you interested in learning more about Urbanise Strata? Book a demo today.
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