A WA strata review has proposed reforms requiring clearer disclosure of manager fees, charges and commissions, and improvements around conflicts of interest.

A phase two discussion paper released this week as part of a scheduled legislative review canvasses issues raised through an initial consultation and seeks views on potential reforms.

Initial feedback called for greater governance and transparency measures on commissions, rather than outright bans, the paper says, with breakdowns in trust and concerns strata managers might prioritise financial rewards over owners’ best interests flagged.

“This was particularly emphasised in relation to strata managers receiving commissions from insurance brokers for arranging strata company insurance. Stakeholders were concerned that these arrangements inflated insurance costs and were not always appropriately disclosed.”

Reforms would clarify that any benefit received in connection with the strata manager’s functions must be disclosed, with a penalty for non-compliance, and managers would have to report annually to owners on commissions and benefits received.

The paper proposes replacing the terms indirect and direct, used in conflict of interest provisions, with perceived, potential and actual categories.

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Insurance affordability and availability is also a key issue. The Strata Act requires owners’ organisations to obtain “fit for purpose” cover, but they can seek an exemption if they have taken “all reasonably practical steps” and insurance is not available on reasonable terms.

“Feedback indicated that there was not enough flexibility in the Strata Act around the application of scheme insurance requirements,” a summary says. It also showed strata owners felt they were only being presented with quotes that gave their manager the best commission.

Proposed reforms include requiring a minimum number of quotes when insurance is taken out or renewed, outlining what are considered “reasonable steps”, and providing greater flexibility for owners to obtain cover on “reasonable terms”.

The review proposes reforms on short-term rental accommodation and building defects, but a push for better regulation of the strata management industry – such as through licensing or registration – is seen as an area requiring further analysis and “future consideration”.

WA Planning and Lands Minister John Carey says proposed reforms aim to improve governance, transparency and flexibility for people in strata living, without imposing additional costs on owners.

“We want more people to consider the option of living in strata units, villas and apartments, and these reforms support this,” he said.

Submissions on the discussion paper are due by November 26.