NSW Government Launches Inquiry into Strata Management Firm Netstrata
The NSW government has announced an independent inquiry into Netstrata, one of the country's largest strata management firms, following revelations on ABC's 730 program. The program alleged that Netstrata was charging exorbitant insurance fees and taking undisclosed kickbacks from contractors and suppliers.
The inquiry, to be conducted by a third-party independent expert, will examine Netstrata's business practices, fees, commissions, and relationships with third parties. The government has committed to supporting the integrity of the process and receiving a detailed report. However, it has not yet committed to making the report public.
The ABC's investigation found that Netstrata was charging apartment owners insurance brokerage fees as high as three times the typical rate, often without disclosing this information to clients. The company's financial records show that it has banked over $21 million in brokerage fees since 2015, contributing to profits of nearly $50 million during that period.
Additionally, Netstrata was found to be taking kickbacks from contractors and suppliers hired using strata funds. These "referral fees" could be as high as 15%, according to Netstrata's managing director Stephen Brell. Despite written pledges to disclose these kickbacks to owners, the company failed to do so in annual reports dating back to 2015.
Netstrata has apologized for any lack of transparency and promised an immediate audit. The company has also invited Fair Trading to conduct a review of its practices.
The inquiry is expected to provide valuable insights into the practices of Netstrata and potentially lead to regulatory action. It is crucial to ensure that strata residents have confidence in the professionals managing their valuable assets. This inquiry is a step towards achieving that goal.