Trust or Bust: How Radical Transparency Can Save Your Strata Management Reputation

There's a certain sameness about strata manager websites. It's one of those things that makes it hard to differentiate service providers, and leads to owners’ decisions being made on price.

One of the words commonly used on strata management websites is 'transparency'. It very often goes with 'commitment’, as in, 'We are committed to transparency.'

Reviewing a Queensland body corporate managers work recently I found this on their website, with redactions to protect the guilty -

“For over [X]years [X Strata] has honoured their commitment to transparency and ethical practices. They do not accept commissions…’

Yet the annual general meeting papers for a scheme they manage demonstrate anything but such commitment.

Behold, accounts that disclose transactions with an insurance broker and a body corporate management agreement disclosing arrangements with two insurance brokers entitling the manager to commissions of ‘Up to 20%’.

There are some problems with this (do you think?) -

1.     The website is at odds with the agreement

2.     The disclosure doesn’t tell us what the body corporate manager gets ‘up to 20 %’ of, nor does it provide an estimate of this payment as a dollar sum

3.     The meeting papers don’t disclose the commission received.

And as for the old chestnut ‘but the commission arrangement was disclosed in the agreement with consent’, the agreement is signed by the body corporate manager for the body corporate. There is no signature anywhere by any owner. Give me a break.

But in this case, as in many, the lack of transparency goes further.

In the financial accounts, to determine the body corporate managers fees for the year(excluding insurance commissions which are off the books of the body corporate), you must total 9 categories of expense which are not indicated in the accounts as being paid to the body corporate manager. The 9 items are –

·       Administration fee

·       Contractor compliance

·       Electronic storage and technology

·       Insurance renewal management fee

·       Legal debt collection

·       Mailhouse

·       Offsite archiving and storage costs

·       Secretarial fee

·       Workorders.

To determine that these sums have been paid to the body corporate manager you have to go to the general ledger supplied separately to the financial accounts.

This is not a commitment to transparency.  If you must separate out your additional fees, a commitment to transparency would be a line item in the accounts headed -

‘Body corporate managers fees (excluding insurance commission):

(and follow this by a list of the individual items and fees)’

This body corporate manager is a member of SCA QLD, and uses the SCA QLD form of agreement.

To my friends and clients that are strata managers and / or members of SCA who may well ask ‘Why call this out at the risk of further damaging the reputation of strata managers?’, the answer is simple.

‘The standard we walk past is the standard we accept’ (Lieutenant General David Morrisson, 2013).

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