Strata managers in Victoria are facing increasing criticism for receiving undisclosed kickbacks from insurance companies, reportedly as high as 20 percent. This practice, while legal, has raised concerns among apartment owners who are often unaware of these hidden commissions. Advocates for owners are calling for urgent reforms as the state government reviews strata laws, arguing that these commissions are both “perverse” and “ethically indefensible.”
Insurance premiums represent the largest expense for many apartment budgets. The current business model allows strata firms to subsidize low management fees through these kickbacks, which typically remain invisible to owners. Research conducted by Dr. Nicole Johnston, a socio-legal expert, highlights that this practice has created a system of “institutionalized” conflicts of interest, prioritizing managerial profits over the legal rights of the owners.
Dr. Johnston’s report, produced in collaboration with NSW Fair Trading, identifies this issue as a significant structural problem that has persisted for over 30 years. She argues that legislation is needed to eliminate these practices entirely, stressing that previous efforts at transparency have not sufficiently addressed the underlying conflicts of interest.
Despite legal obligations for managing agents to prioritize owners’ best interests, Dr. Johnston’s findings indicate that profit motives frequently take precedence. This is particularly concerning for the 65 percent of Victorian owners dealing with building defects, as inflated premiums for these “risky” buildings provide additional financial rewards for managers.
In 2021, strata managers were mandated to disclose any commissions received. Yet, a survey by the owners’ advocacy group Australian Apartment Advocacy revealed that 59 percent of Victorian apartment owners remain unaware if their strata manager receives such payments. Only 34 percent were confident that their manager did not accept kickbacks.
Melbourne apartment owner Mark Richards, who has experience with multiple owners corporations, expressed frustration over the lack of transparency regarding commissions. “It’s like pulling teeth,” he stated, referring to the difficulty in obtaining information about managers’ financial arrangements, even during annual general meetings.
There are mixed opinions on the issue within the strata management community. Recent regulations from the Australian Securities and Investments Commission require brokers and strata managers to secure explicit consent from owners’ committees before receiving commissions, eliminating the possibility of hidden fees. While the Owners Corporation Network has advocated for improved transparency, Dr. Johnston argues that mere disclosure fails to resolve inherent conflicts.
In contrast, the Strata Owners Alliance, a grassroots advocacy group that does not accept industry sponsorship, is pushing for a complete ban on commissions. Co-founder Adam Promnitz highlighted concerns about fees imposed even when committees seek independent insurance options, indicating that strata managers sometimes enforce “lost commission” clauses.
Promnitz remarked, “In 2026, strata managers taking any form of commission from a supplier is completely inappropriate, and every owner in Victoria should be furious this is happening.”
Calls for reform have gained traction, with Sam Reece from Apartment Advocacy Australia emphasizing the need for legislative changes to ensure fair treatment for the growing number of Victorians living in strata-managed properties.
Dr. Johnston’s report suggests that insurance commissions are merely the most visible aspect of a broader array of conflicts within the industry, including managers recommending affiliated maintenance companies.
The Strata Community Association, representing many strata managers, remains divided. While its NSW branch proposed a phase-out of commissions to restore trust, the Victoria branch has assured its members that they will continue to support commissioned policies, arguing that a ban could significantly increase management fees.
Some strata management firms, however, are moving towards eliminating commissions. Brandon Koprivnjak, national operations manager at TSM Strata, noted that his firm has begun removing commissions from new contracts, although this has led to a necessary increase in base management fees.
As Victoria prepares for a legislative overhaul, the government is under pressure to address these issues comprehensively. Consumer Affairs Minister Nick Staikos stated that an expert panel has been tasked with investigating “dishonest business practices” and inappropriate commissions.
Opposition consumer affairs spokesman Tim McCurdy echoed calls for a ban, asserting that any increases in management fees should be transparently agreed upon by owners, not funded through conflicted arrangements.
Dr. Johnston concluded, “The question is not whether change will come, but whether it will be led by the industry or imposed upon it.” As the landscape of strata management in Victoria evolves, the focus on ethical practices and transparency remains paramount.
