An inquiry has recommended banning NSW strata managers from accepting commissions and restricting supplier intermediaries including insurance brokers from receiving commissions for related work.

The state government last year asked the Productivity and Equality Commission to examine remuneration arrangements amid concerns about transparency, trust and competition in the sector.

The commission’s report says the review, which considered several options, found “a strong case” for intervening to restrict strata managers from accepting commissions, in place of current disclosure-based regulation.

“It also finds that there would be further benefits from restricting commissions for third-party intermediaries like strata insurance brokers,” the report, released this morning, says.

Strategies suggested for the intermediary change include regulating strata manager procurement processes and advocating for a federal government policy shift on broker commissions.

A three-year transition period is proposed to ensure all agency agreements and services contracts can be rolled into non-commission terms as they expire.

The review says consultation feedback indicated most parties do not think disclosure requirements have substantially changed owners’ knowledge or awareness of the way services were charged, or what they included.

It says strata insurance is mandatory, non-insurance risk is low and fee‑for‑service models already operate widely, as commissions often flow to strata managers rather than brokers.

“Brokers are therefore still likely to participate in the market without commission‑based remuneration. In this context – and potentially in broader general insurance markets – the benefits of removing commissions outweigh the costs.”

Better Regulation and Fair Trading Minister Anoulack Chanthivong says the report highlights long-standing concerns and presents a range of options to address commissions and other conflicted payments, while seeking to protect consumers and improve outcomes for strata communities.

“The government will now carefully consider the commission’s findings and recommendations, including the potential impacts on owners, strata managers and the broader industry,” he said.