New Standards for Conflict Disclosure - There's much more to it than insurance commissions!

Beginning this Tuesday, 3 February 2025, a new standard for disclosing conflicts of interest applies to all strata management companies in NSW. The impact will have ripple effects in other states and territories. It will raise the bar for what should be best practice. 

The mistake most managers will make is falling for the trap that this is just about insurance commissions. That’s what all the chat has been about, but these laws go much further than insurance commissions. They strike at the heart of what has become the norm for suppliers to the strata management business – managers taking a clip (or non-monetary benefit) on services supplied to strata schemes. 

Here are 7 things that must now be declared, other than insurance commissions (and in fact, should always have been declared!) – 

1. Business and home loans, and overdrafts taken out by strata managers with banks holding trust funds for the schemes managed by them.
2. Subsidised software used by strata managers from software suppliers of banking and bill payment services for strata schemes. 
3. Complementary training and CPD from professionals (usually lawyers and engineers) who receive referrals from the strata manager. 
4. Free consulting to developers for schemes where the strata manager is then put up as the initial or preferred strata manager.
5. Sponsorship of the managers’ conferences, retreats, and events where there is an expectation of work or referrals.
6. Advertising arrangements where suppliers to strata schemes pay for a place on the strata managers’ directory of service providers.
7. Income earned from a strata scheme supplier (e.g., law firm or debt collector) in which a strata manager is a part owner or has an indirect interest. 

These new laws and standards bring with them the need for new standard operating procedures including -

• Standard Operating Procedure - Conflict of Interest Disclosure 
• Checklist of relationships and arrangements that must be disclosed
• Agency Conflict of Interest Policy 
• Conflict of Interest Disclosure Form 
• Conflict of Interest Register
• Insert for Strata Management Agency Agreement about conflicts and disclosure 
• AGM Conflicts Disclosure and Approval Motion 
• AGM Report on Commissions and Training 
• Annual disclosure notice 
• Notice of new arrangements 
• Pre-appointment disclosure notice

I’ll be hosting a webinar on Thursday 20 February at 10:00, to talk about how and why you need to comply with these new laws and standards. You’ll also get a toolkit, containing all the documents listed above. To register your interest click here.