From NSW to the ACT: Will the Push to Ban Insurance Commissions Go National?

One week after ringing the bell and announcing that SCA (NSW) members would phase out insurance commissions from January 2026, hard questions are being asked. Inconvenient questions, but important questions, nevertheless. Three of them have gained traction on social media this week -  

·      Will SCA (NSW) lose members?

·      Will other state and territory members of the national SCA federation follow suit?

·      Will SCA (NSW) members also be banned from having interests in insurance brokerage firms?

The leadership of SCA (NSW) is peddling hard. They’ve said they’ll support members in the transition to other charging models, but there’s no detail yet on what that looks like or when they will deliver it. Given their self-imposed deadline is just 15 weeks away, members are nervous.

‍SCA (NSW) under pressure

Will SCA (NSW) lose members? We are yet to see an announcement from the biggest of Big Strata firms, PICA, about their position. It’s no secret, however, that PICA has been both a long-time member of SCA and a hardened advocate for commissions. It’s hard to imagine they will stay in the tent. The loss of PICA's membership fees, and access by SCA sponsors to their staff, would hurt SCA (NSW). The only big firm in the tent so far seems to be Bright and Duggan.

‍SCA (ACT) announces they are against commissions

Of the other SCA federation members, only SCA (ACT) is out of the blocks. Speaking to local press following the NSW announcement, SCA (ACT) President, Chris Miller, has called on the ACT Government to ban insurance commissions. He says most of their members were already on board with a three-year phase-out. Miller names the ACT firms on board, but the largest in the nation’s capital, Civium, is not on the list. Region Media reports Civium has refused to comment but referred the media to their submission to the Legislative Assembly. In their submission, they made the case to hold on to more than $1M of annual insurance commission they would otherwise lose.

‍What about SCA (NSW) and brokerage firms?

The biggest follow up question of them all remains unanswered: what will SCA (NSW) do about members who have financial interests in insurance brokerage firms?  SCA (NSW) President Robert Anderson says on this question, they are consulting members. Whatever the members might say on this issue, there is still the matter of the SCA (NSW) Professional Standards Scheme which is up for renewal next year. Surely, the Professional Standards Council’s will not tolerate a continuation of this conflict of interest.

Meanwhile, back in Canberra, Anderson’s counterpart, Chris Miller, has more to say on brokerage interests. He tells this blogger that, ‘while they haven’t yet formulated the motion members will vote on, in his view, any prohibition on insurance must also flow to any material ownership interest in adjacent businesses such as brokerages, that could be used to achieve the same ends as earning a clip’. Nicely put, Chris.

‍What's next – other related party income?

As we traverse these unchartered waters, the hard questions will keep coming. Nothing good is easy. Fair notice to all; the next hard question will be this – What about managers’ financial interests in other related parties servicing owners corporations? The principles of fiduciary duties underpinning all these decisions apply as much to these opaque revenue sources as to insurance commissions. In the frame will be related party contracts for caretaking, facilities management, law firms, debt collectors and repairs and maintenance. And let’s not forget that the Crimes Act on secret commissions applies to suppliers (the payor’s) and managers (the payee’s).

It's good that the bell has been rung. Owners, managers and suppliers will be better off when this is done. But there are hard (harder) yards ahead. And as the saying goes, ‘It’s not an easy task to un-ring a bell’ (State v Rader 1912, Oregon Supreme Court).

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