Banning commissions paid by service providers to strata managers will benefit them, their owner clients and boost the economy of NSW by hundreds of millions of dollars, according to a report by the NSW Productivity and Equality Commission (PEC).

A review requested by Fair Trading Minister Anoulak Chanthivong following the Netstrata scandal  has found that moving from a commission-based model to a fee-for-service arrangement “can simplify remuneration structures, improve competition and service quality, increase trust, and lower strata costs.”

“Some stakeholders expressed concern that the removal of commissions will increase management fees to cover strata manager costs, but this is expected to be offset by reduced premiums and other service costs,” the report says.

‘The positive experiences of strata managers operating on a fee-for-service basis shows we can be confident that this change will be sustainable and will enhance competition in the sector.”

The PEC found that transition from a commissions-based model to a fee-for-service structure could generate net benefits for NSW of more than $300 million over the next fifteen years. 

SCA (NSW), the state’s professional body for strata managers, has welcomed the report, noting that it  examined four options for the Government to consider and made seven recommendations, including a prohibition on strata managers accepting commissions, supporting industry and owners with a gradual, three-year transition period to minimise the impacts across the broader sector and following this change, a reduction in regulatory burden for strata managers by removing the requirement to seek three quotes for insurance. 

“Last year, the SCA (NSW) Board resolved to support and encourage members to begin a phased replacement of insurance commissions for strata managing agents. This voluntary transition commenced on 1 January 2026,” said SCA (NSW) President Robert Anderson.  

However, not all strata managers are members of SCA and the law currently only requires them to declare any commissions they take. Two years ago strata management giant Netstrata was exposed in the media for claiming they did not accept commissions on insurance policies while a subsidiary brokerage that they owned did.

Fair Trading’s investigations into that situation are still active although the company has received the very public support of NSW Premier Chris Minns.

“Our sector has been aware of the Government’s intention to review insurance remuneration practices for some time, and the Board’s decision was only taken after careful consideration and consultation. It was our ongoing commitment to raise professional standards, strengthen consumer trust, and deliver better outcomes for owners and residents living in strata communities.”

The report is not yet part of NSW government policy but SCA (NSW) says it believes that a three-year, gradual phased replacement of insurance commissions presents the best opportunity to move forward for the industry and consumers.

While commissions received by strata managers were the primary focus of the review, the report says, the PEC found that restricting commissions in the strata services supply chain – for instance, among insurance brokers and other service providers – would have further benefits for NSW.

This could be achieved by prohibiting strata managers’ involvement in commission-based contracts, regulating suppliers directly or collaborating with the Australian Government for reform, says the report.

“Conflicted relationships may remain an issue The Review identified broader issues within the strata management sector, such as the growing trend toward vertical integration between strata management firms and various service providers including insurance broking, maintenance, repairs, and other ancillary services,” it continues.

“Personal or business connections may create commission-like incentives, whereby strata managers benefit financially or otherwise from directing business to related entities. The NSW Government should monitor developments related to these practices and formally evaluate recent disclosure changes targeting these relationships.”

Considering the amount of work involved and the cultural change this represents, the report says the NSW Government should allow commissions to be phased out over three years. This will allow strata managers to adjust pricing and systems without risking their viability or creating unnecessary implementation costs.

For owners, it adds, the NSW Government should roll out education campaigns to explain what to expect and develop standardised template documents for strata managers to facilitate easier communication of the changes.