The National Insurance Brokers Association has raised “serious concerns” over an inquiry recommendation to restrict NSW “supplier intermediaries” from accepting commissions for strata-related work.

The state Productivity and Equality Commission says the proposed restriction would include insurance brokers and apply in addition to its recommended prohibition on strata managers accepting commissions.

NIBA says brokers are not supply chain intermediaries but licensed financial services professionals subject to Australian Securities and Investments Commission oversight and the code of practice, with legal duties to act in clients’ best interests.

Extending restrictions to broking conflates two fundamentally different regulatory environments and changes should address conflicts “where they are clearly demonstrated, without inadvertently reducing the access strata communities have to independent professional advice”, it says.

CEO Richard Klipin cautioned against reforms that could create unintended harm, while welcoming the review’s focus on building trust, transparency and better consumer outcomes in the strata sector.

“These are important objectives, and we support reforms that improve disclosure and accountability where conflicts genuinely arise,” he said. “But it is critical that policy responses remain targeted and proportionate.”

Michelle Levy’s Quality of Advice Review retained the exception to the ban on conflicted remuneration for general insurance products and expressed concerns that consumers may not be willing or able to pay a fee for broker advice, NIBA notes.

The peak body supports a recommendation to remove the need for strata managers to seek three insurance quotes, after a transition period, given the compliance burden – especially for risks where getting three genuine quotes may be difficult or even impossible.

Strata Community Association (NSW) president Robert Anderson says the group’s board will meet to consider the inquiry report, as it moves ahead with its own plans on remuneration.

SCA last year said members would transition away from insurance commissions from January on a voluntary basis, and it has held workshops attended by more than 200 participants.

“We have had some business owners who were opposed to it originally who have come on board,” Mr Anderson told insuranceNEWS.com.au.

He says a recommendation for regulatory monitoring during the transition would allay concerns that insurers would not pass on commission removal savings, while he favours a broking fee for service.

“We want to see everyone’s boat lifted,” he said. “This is good for the strata managers, it is also good for owners, and brokers will be thinking about their model, I think.”

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