“It’s just not right and too many people have kept quiet,” said Tyrone Shandiman (pictured above).
The submissions deadline for a nationwide survey seeking stakeholder input on strata industry misconduct has closed. Shandiman, who is chair of the Australian Consumers Insurance Lobby (ACIL), told Insurance Business that 80 submissions were received. He said the number, more than he expected, is evenly spread between consumers and businesses involved in the strata sector.
The survey was part of ACIL’s response to growing concerns around an alleged “systemic pattern” of misconduct by some strata managers and brokers. According to some reports, there are brokers charging fees three times the typical rate.
Shandiman, who is managing director of the brokerage Strata Insurance Solutions, said the survey was also about widening the scope of ACIL’s investigation.
In February, ACIL called on the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) to investigate 146 cases of alleged strata industry misconduct. Shandiman said the regulators are considering whether to officially investigate.
He said most of these alleged cases came directly from his experience in the strata industry or from the experience of ACIL committee members.
“It needs to be a wider survey and this national survey has been done to back that [the 146 cases] up,” he said. “If anyone questions why I’m doing this I can tell them I certainly have nothing to gain personally from this.”
In a recent LinkedIn post, Shandiman sought to address the issue of his “potential conflicts of interest.”
He said whatever the origin of any alleged cases of misconduct, “It’s a civic duty of anyone to report wrongdoing.”
Last month, an ABC News investigation allegedly uncovered serious abuses by strata management firm, Netstrata. At the time, Netstrata’s managing director Stephen Brell was also NSW president of the Strata Community Association (SCA).
Following the ABC’s report, Brell “officially tendered his resignation as both SCA NSW president and board member,” according to a statement on the SCA NSW website.
The statement also said Brell is “undertaking an immediate audit on his business and has invited NSW Fair Trading and SCA NSW to conduct a review of Netstrata’s practices.”
SCA NSW has also said it is commissioning a “a full investigation by an independent firm” of “any allegations of behaviour that may or may not meet professional standards”
In May last year, industry consultant John Trowbridge completed an independent review of the strata insurance market commissioned by Steadfast Group.
Trowbridge concluded that the “opaque” brokers fee system should be phased out in the interests of transparency.
IB asked Trowbridge for his response to ACIL’s allegations. Trowbridge said he was aware of brokers and strata managers whose fees and commissions “exceed competitive market rates, sometimes by large margins.”
“In many such cases, the strata committee and the owners are not aware of the details of these arrangements,” he said. “That is part of the reason why transparent disclosure needs to be pursued across the industry.”
He referred to the Strata Insurance Disclosure Handbook, his reference guide based on his review. On page 17 of the handbook Trowbridge set out a series of steps designed to improve the way insurance brokers are appointed for strata insurance policies.
In December, the Strata Community Association (SCA) released its own voluntary industry guide: Strata Insurance Disclosure Best Practice Guide. The guide, said Trowbridge, is closely aligned with his handbook.
Following the cases or alleged misconduct identified by ACIL and ABC News, SCA Australasia released a statement.
The statement said the peak body was taking a number of actions including fast tracking best practice measures and appointing an independent chair for its complaints and conduct panel.
Are you a stakeholder in the strata insurance industry? What should be done now to improve the industry’s transparency and correct any misconduct? Please tell us below
