The following was sent to JimmyT by Peter Byrne, Executive General Manager Business Development and Marketing for the PICA Group.
It is reproduced here unedited and without comment.
Question 1: How was the compliance fee charge calculated?
- The fee was based on expenses incurred – over and above business-as-usual activities, to recover in part the significant and legitimate costs for the implementation of the new legislation requirements, across all relevant schemes, to ensure owners corporation compliance.
- The reason for the charge was a conscious decision to be transparent in isolating the fee for legislation compliance only, rather than build it into future management fee (or other) increases which would’ve meant our customers bearing an ongoing cost.
- As there is a certain amount of work to be done for each owners corporation to be compliant, the total cost (excluding GST) was based on a conservative number of resource hours, and allocated divided into 3 tiers by lot size:
o 2-15 lots: $260 for approx. 1.5 hours
o 16-50 lots: $510 for approx. 2.5 hours
o 51+ lots: $690 for approx. 3.5 hours
Question 2: On what basis was the compliance fee charged?
- The compliance fee is a legal and justifiable charge.
- At times extra services need to be provided in special circumstances. The legislation services provided was over and above what we had to do to satisfy our own requirements to be compliant.
- We believe that the amount we charged was much less than the charges we would have been entitled to charge on an hourly basis, and does not compensate the full amount of time and resources spent to ensure owners corporation compliance.
- Under schedule B and D, we have the right to charge for “additional services” as per the normal course of doing business.
Question 3: Shouldn’t ensuring our customers compliance be part of business as usual activity?
- As strata managing agent it is our responsibility to ensure the owners corporation is compliant.
- We took the proactive stance of preparing for the legislation change two years in advance of it being introduced.
- Only the work that was incurred to ensure our customers are compliant was charged for.
- As mentioned above, under schedule B and D we have the right to charge for “additional services”, as per the normal course of doing business.
- If we calculated the compliance fee in isolation or per scheme, the charge would have been significantly higher i.e. calculated by hour, per scheme. Instead we were able to leverage the size of our business, by gaining efficiencies across resources to benefit both us and our customers.
Question 4: What value do our customers tangibly gain from paying the compliance fee?
- Access to new master documents such as the “Statement of key financial information”.
- Access to updated master documents:
o Terminology changes
o Section number alignment with the Acts
o Inclusion of new items required for certain documents
o The addition of new motions (e.g. declaration of training received and likely to be received, annual fire safety statement, by-law review), etc.
o Agendas, minutes, proxies, company nominees (over 1,000 new and upgraded templates)
o Section reports
o Financial reports
o Agency agreements (section reference, terminology changes and new compliance matters)
o More than 100 other documents that refer to a section of the Act or executive committee (e.g. welcome letters, by-laws, warning letters, etc.), that is new templates which the owners corporation can use, rather than addressing matters as they arise and charging per instance.
- Risk prevention of potential consequences for the owners corporation not complying with the new legislation range from monetary penalties, failure of actions at NCAT, motions being challenged at meetings or being declared invalid or the owners and/or the committee members being found liable.
Question 5: What else did we do (time not charged for) to ensure that the PICA Group is acting responsibly?
- We reviewed the new Act and Regulations in detail which consisted of over 300 pages and took almost 10 months to complete the review.
- We proactively engaged with key industry bodies such as the NSW Department of Fair Trading and Strata Community Australia (SCA) to lobby for beneficial and sensible changes on behalf of our customers.
- A team of in-house strata specialists were appointed to assess the impact of the new legislation. The outcome was a detailed reference document which our strata managers can access should they face a situation that requires reference to the new laws.
- 23 easy to reference fact sheets were created.
- External senior legal advisors were appointed to ensure the appropriate meeting and operational documentation was in place for full compliance.
- Approximately 13,000 hours was spent on developing new processes and software solutions to meet the new requirements of this legislation.
- Extensive training was provided to staff, owners and agents to ensure we offer the necessary guidance on how to navigate through these changes.
- A project manager was allocated to ensure the smooth roll-out of changes impacting all stakeholders.