After the PEC Report: What a Post-Commission Strata Industry Actually Looks Like in NSW

What this guide covers

The NSW Productivity and Equality Commission delivered its final report in March 2026, after a review triggered by the 2024 Four Corners investigation and the Netstrata revelations.
Four options are on the table, ranging from voluntary self-regulation to a full ban on commissions throughout the strata services supply chain.
The PEC estimates moving from commission-based to fee-for-service remuneration could produce $300 million in net benefits for NSW over 15 years.
SCA NSW members have already begun a voluntary phase-out from 1 January 2026, three years ahead of any compulsory legislation.
The structural finding (that commissions create incentives misaligned with owners' interests) is unlikely to be reversed regardless of which option the government picks.
What committees should do now, while the bill is still being drafted.

The conversation about strata manager commissions in NSW has shifted. For two decades, the question was whether commissions were acceptable if disclosed. As of late March 2026, the question is no longer that. The NSW Productivity and Equality Commission has formally and independently examined the issue at a whole-of-system level, and the framing has moved from "are these arrangements appropriate" to "what should replace them, and how fast."

This is the post that follows from the Four Corners audit guide. That earlier piece covered how a committee could investigate its own scheme's commission arrangements after the 2024 ABC investigation. This one covers what the regulatory landscape actually looks like now that the PEC has reported, and what committees should be doing in the months between the report's release and any legislative response.

How we got here

A short timeline, because it matters for understanding what changes from here.

The 2024 ABC Four Corners episode "Strata: The Heist of Hidden Fees" exposed undisclosed insurance commissions, supplier kickbacks, and conflicts of interest at scale across the NSW strata management industry. Among the most damaging revelations was the arrangement at Netstrata, where the company publicly claimed not to accept commissions on insurance policies while a subsidiary brokerage they owned did. NSW Fair Trading's investigation of that situation remains active.

In response, then–Fair Trading Minister Anoulack Chanthivong asked the NSW Productivity and Equality Commission to conduct an independent review of the market impacts of prohibiting strata managing agents from accepting insurance commissions or other conflicted remuneration.

The PEC issued an issues paper in November 2025. Consultation closed in late 2025. The final report was delivered to the Minister on or around 27 February 2026 and made public in March 2026.

In parallel, two voluntary developments outpaced the regulator. From February 2025, new rules required strata managers to disclose supplier connections, broker fees, and commissions, with penalties up to $110,000 for non-compliance. From 1 January 2026, the Strata Community Association NSW began encouraging its members to commence a voluntary three-year phase-out of insurance commissions, replaced by transparent fee-for-service arrangements as existing management agreements come up for renewal.

So by the time the PEC reported, parts of the industry had already started moving. The report's role was to test whether that voluntary movement was sufficient or whether legislation needed to do more.

What the PEC actually found

The report's core finding is structural rather than behavioural. Commission-based payments to strata managers create incentives that are not aligned with the interests of owners, regardless of whether any individual strata manager acts ethically within those incentives.

Three observations underpin that finding.

Disclosure is not producing the outcomes it was designed to produce. Despite expanded disclosure obligations introduced in 2025, owners continue to struggle to understand how commissions affect the price and quality of services they receive. The PEC's view is that the current disclosure framework, even when complied with, does not give owners the information they need to assess whether a strata manager is acting in their best interests. This is a polite way of saying that disclosure alone has failed.

The effects are felt at the individual owner level. Higher insurance premiums, distorted procurement, and reduced competition in the supply chain all show up in the levies that individual owners pay, not in headline industry statistics. The report frames this as a consumer protection issue rather than a sectoral governance issue, which matters for how any legislative response is likely to be drafted.

Vertical integration is changing the picture. The industry trend toward strata management firms owning or being commercially aligned with insurance brokers, maintenance contractors, debt recovery providers, and ancillary service businesses means that the commission problem extends beyond the strata manager's own remuneration. The PEC explicitly notes that prohibiting strata managers from receiving direct commissions, while leaving the rest of the supply chain untouched, would partially address but not eliminate the misalignment.

The report also addresses a defensive argument that the industry has used for years: that commissions are an efficient way to pay strata managers for the work they do on insurance procurement and other ancillary services. The PEC's response is that the same compensation can be delivered through transparent fee-for-service arrangements without the conflict, and that the experience of strata managers already operating without commissions confirms this is sustainable.

The four options

The report puts four policy options on the table.

Option 1: Self-regulation. Build on the SCA NSW voluntary phase-out and let the industry transition itself, supported by the existing 2025 disclosure rules. The PEC describes this as the lowest-disruption option but notes that not all strata managers are SCA members, and the law currently only requires them to declare commissions, not to refuse them.

Option 2: A ban on strata managers accepting commissions. Direct legislative prohibition. Under this option, strata managers could not receive commissions from any service provider in connection with services arranged for the owners corporation. They would charge fees instead, paid directly by the scheme.

Option 3: A ban that extends up the supply chain. Like option 2, but with an additional restriction on strata managers arranging services that involve commissions further up the chain. This is the option that addresses vertical integration most directly. A strata manager could not, for example, arrange insurance through a broker who pays a commission to anyone in the chain, even if no money flows back to the strata manager.

Option 4: Prohibit percentage-based commissions, permit a regulated flat fee. A middle ground. Commissions in their current percentage-of-premium form would be banned, but a regulated flat fee paid by suppliers could replace them. This preserves a commission-like structure while removing the incentive to recommend higher-priced products.

All four options share the same stated objectives: better aligning strata managers' economic incentives with owners' interests, enhancing transparency of remuneration, and protecting strata owners as consumers.

The inclusion of option 4 is notable. It signals that the PEC was not under instructions to recommend the most aggressive option, and that an outcome short of a full ban is genuinely on the table.

The $300 million number

The PEC estimates that moving NSW from a commission-based to a fee-for-service model could deliver more than $300 million in net benefits over 15 years.

Two things to note about this figure. First, it is a net benefit, not a gross saving. The estimate accounts for transition costs, the likelihood that strata management fees will rise to replace foregone commission revenue, and the offsetting reduction in insurance premiums and other service costs. The PEC's modelling does not assume that strata managers will be worse off; it assumes the same total compensation will be delivered through more transparent channels.

Second, the figure is contested. SCA NSW supports a voluntary, phased transition. Larger industry participants such as PICA Group have expressed concerns about the disruption involved. Critics point out that if a strata manager currently receives $5,000 per year in insurance commissions and that revenue is replaced by a $5,000 increase in management fees, the net benefit to owners is zero, and that this is what most schemes will see in the short term.

The PEC's response is that the $300 million figure comes from systemic effects beyond direct fee substitution: improved competition among strata managers (who must compete on transparent fees rather than opaque commission stacks), more disciplined insurance procurement (because the strata manager's incentive to recommend a particular policy disappears), and reduced supply-chain markups (because vertical integration becomes less profitable when commissions are removed).

Whether the $300 million materialises depends on which option is chosen and how rigorously it is enforced. Self-regulation will likely deliver less; option 3 most.

What's already changed without legislation

The PEC report did not arrive into a static market. Three things were already happening.

February 2025 disclosure rules. Strata managers must clearly disclose relationships with suppliers, provide detailed breakdowns of insurance quotes that show commissions and broker fees, and cannot receive commissions where owners arrange insurance independently. Penalties of up to $110,000 apply for breaches. This regime is already in force and committees can already audit against it; the Four Corners audit guide covers how.

SCA NSW voluntary phase-out from 1 January 2026. Members are encouraged to begin a three-year phased replacement of insurance commissions with equivalent fees, applied to new contracts and to existing contracts as they renew. Compliance is voluntary; SCA members can choose not to participate. The Association has explicitly stated this is a replacement of revenue source, not a reduction.

Ongoing voluntary movement among non-SCA agencies. Some strata managers, particularly newer entrants positioning themselves on transparency, have already moved to fully fee-for-service models. These agencies provide the empirical base the PEC relied on when concluding fee-for-service is a viable structure.

The combined effect is that even if the government takes 18 months to introduce a bill, the industry will continue to shift before any compulsion arrives. Some buildings will see their next renewal arrive in a partially-transitioned form already.

What committees should do now

The legislative timetable is uncertain. The Minister has the report. Drafting a bill, introducing it, debating it, and passing it could take 12 to 24 months. Compliance dates would likely be staged after that. A committee that waits for legislation will spend two to three years operating under the current commission model.

There are five things a committee can do in the meantime.

Audit the last renewal's commissions. The 2025 disclosure rules already require your strata manager to provide a detailed breakdown of insurance commissions, broker fees, and any other supplier-side payments connected to the scheme. Request the breakdown for the most recent insurance renewal. The number it produces is the benchmark for any fee-for-service equivalent. If your scheme paid $8,000 in commission revenue to your strata manager last year, that is the size of the gap any fee-for-service replacement needs to fill.

Ask the strata manager for a fee-for-service quote. Even if your current contract is commission-based, ask the agency to produce an alternative quote on a fully transparent fee basis. Most agencies, particularly SCA members, can now produce this quote. The two structures should be roughly cost-neutral if the agency is acting in good faith. If the fee-for-service quote is materially higher, that is informative.

Build transition language into the next contract renewal. Any management agreement entered into in 2026 will likely be in force when legislation arrives. Including a clause that commits both parties to transition to fee-for-service in line with any new statutory requirements removes the future renegotiation risk. SCA members are already drafting such clauses; ask for one.

Document supply chain conflicts. Beyond the strata manager's own commissions, the PEC report highlights vertical integration. Note which insurance broker the manager arranges your policy through, which contractors are routinely used for repairs, and which debt recovery firm handles arrears. If any of these are commercially related to the strata management firm, the relationship matters and may be affected by option 3 if adopted.

Don't change managers solely for this. Switching strata managers is disruptive (the how to change strata managers guide covers the costs). Switching to a non-commission agency before legislation crystallises is a reasonable thing to do if your current agency is otherwise underperforming. It is not, on its own, sufficient justification to change. Most agencies will be on a level playing field within two to three years either way.

Cross-state implications

The report is a NSW document, but it will have effects beyond NSW. Three reasons.

The PEC's structural framing is portable. The finding that commissions create misaligned incentives, regardless of disclosure, is not specific to NSW law. Any state regulator examining the same question will reach a similar conclusion if the underlying analysis is sound.

National strata management firms operate across states. The largest strata management businesses in Australia operate in multiple jurisdictions. A national firm that has restructured its NSW operations to remove commissions has limited reason to retain them in Queensland or Victoria. The transition will spill across state borders even without parallel legislation.

Other states are watching. The Strata Community Association in each state, the OCN, and consumer advocacy groups are already pointing to the NSW reform as a benchmark. Victoria's Owners Corporations Act review included commissions in its terms of reference. Queensland's reform conversation includes them. Western Australia and South Australia have not actively reformed but have not foreclosed the possibility.

The honest expectation is that within five years, commissions will be substantially reduced or eliminated from strata management arrangements across most of the eastern states, regardless of whether each state legislates explicitly. The combination of voluntary industry movement, disclosure pressure, and the NSW precedent will do most of the work.

The structural shift the report has already delivered

Whatever option the NSW government picks, one part of the conversation has already changed.

For two decades, the question was: are commissions acceptable if disclosed? The answer was effectively yes, with caveats, until the Four Corners investigation made the caveats untenable.

After the PEC report, the question is: how should strata managers be paid in a way that aligns their incentives with owners' interests? The answer is no longer "with commissions, plus disclosure." It is some variant of fee-for-service, with the policy debate confined to how strict, how fast, and how broadly across the supply chain.

That shift is not reversible. Even if the government picks option 1 and lets the industry self-regulate, the question itself has moved on. Owners now know what to ask; committees now know what to demand; SCA members are now committed to the transition; the largest agencies are restructuring. The legal framework will catch up.

For committees, the practical implication is that the next 18 to 24 months are a window. The schemes that engage with the transition deliberately (auditing existing commissions, requesting fee-for-service alternatives, building transition language into renewals) will arrive at the new regulatory landscape with the work already done. The schemes that wait will arrive at the same place, but having spent two more years paying for arrangements they could have already restructured.

How UnitBuddy fits

UnitBuddy holds the building's contract, insurance, and procurement records in one place. The financial dashboard separates strata management costs by schedule, so a committee can see at renewal time exactly what is being charged in fees versus what is flowing through as commissions on procured services. The compliance tracker holds the renewal cycle for each major service contract, so the next conversation with the strata manager about transitioning to fee-for-service is on the calendar rather than left to chance.

This is methodology supported by tooling. The Schedule B fees guide and the insurance commissions guide cover the underlying mechanics in detail. The hidden fees in your strata contract guide covers what to look for in the schedule structure when an agency proposes a fee-for-service replacement.

The committee that runs the audit, requests the alternative quote, and builds the transition clause into the next renewal is doing what the PEC report effectively recommends every committee do, regardless of which option the government picks. That is the practical version of getting ahead of the reform.

Further reading: How to Change Strata Managers Without Wrecking Your Building covers what is involved in a transition. How to Read a Strata Management Proposal covers what a defensible fee-for-service proposal should look like. The 2026 NSW Strata Reform Timeline covers how the commission reform fits with the rest of the NSW reform program.