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[Jimmy-T]

Controversial insurance commissions for strata managers to be banned by the NSW professional body from next year.

[See the full post at: NSW SMs to stop taking insurance commissions]

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[strataownersalliance]

The reality is we have recommended committees procure insurance independently of their manager for years and completely avoid any fees. However then the SCA made it standard practice to charge a “lost commission” fee for the commission they would have received.

The commissions have never reflected the actual work required on insurance. The industry has overplayed it’s hand on how much work strata insurance was for years to justify the ridiculous fees and now we are likely just going to see commissions replaced by just as ridiculous fee for service to do not a lot.

We recommend every committee go and procure its own insurance through and independent broker and see how little value your strata manager added in the process.

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[timSP]

Even if the committee source their own insurance quotations, How can we stop the agent from billing the OC for the “lost commission” if this is written into the management agreement?

Is there any thing in the legislation currently that can over-ride or prevent this?

Management agreement has been in place for more than 2 years. NSW.

 

 

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[Jimmy-T]

I believe the changes are intended to apply to new SCA contracts signed after January 1 next year.  After that, if anyone signs a contract that includes such a free kick for their strata manager, then they only have themselves to blame.

Don’t take this as gospel from me, but in the meantime, a contract that allows any service provider to claim compensation for work that they didn’t do could, in theory, be challenged under Australian Consumer law which since July has applied to strata contracts in NSW.

SCA-NSW, the strata managers’ professional body, has already adjusted its standard contract to remove aspects that would have fallen foul of consumer protections.

The Australian Competition and Consumer protection website says that unfair contract terms are prohibited in standard form pre-formatted contracts where one party has significantly more bargaining power than the other, leaving the weaker party with little or no ability to negotiate the terms, and:

• Causes a significant imbalance in the parties’ rights and obligations under the contract.
• Is not necessary to protect the legitimate interests of the advantaged party.
• Would cause detriment (financial or otherwise) to a party if applied or relied upon.

If a court finds a term to be unfair, that term is void, meaning it is treated as if it never existed. However, the rest of the contract remains enforceable if it can operate without the unfair term.
Businesses that propose, apply, or rely on unfair contract terms may face penalties. Each unfair term can attract a separate penalty under the law.

If consumers believe a contract term is unfair, they can:

• Seek advice from consumer protection agencies or legal professionals.
• Report the issue to relevant authorities, such as the Australian Competition and Consumer Commission (ACCC) or the Australian Securities and Investments Commission (ASIC).

These are just general observations and if you are thinking of going down that road, you really should first speak to a lawyer. I don’t know of any strata scheme that has challenged the terms of a contract under consumer law so it’s hard to predict how that might play out, but it could be an option for any scheme that feels it’s being ripped off by any service provider.

Just bear in mind that contracts are an agreement between two parties and if your owners corp has agreed to a contract that turns out to be disadvantageous, that doesn’t make it unfair.

If you want to be alerted when anyone replies to your posts or responds to this topic, please register and login, then you will be able to subscribe to the topic. The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers. NB: Longer threads may spill over to additional pages - look for the numbers on the bottom right, under the last post.

1 user thanked author for this post.

WoodWalker

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[Hillsy]

I am new to unit living and hoping to reduce our fees. I am having difficulty finding an insurer for our units that have a small service station and some shops. Leaving us with the same company that has put up our insurance 2.5 times in a few years with no claims in the last 5 years and none expected in future. Our 3 bed unit is $8k per year now and looks to go up. Any suggestions are welcome.

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[Author]

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