After Four Corners: How to Audit Your Strata Manager for Hidden Commissions

After Four Corners: How to Audit Your Strata Manager for Hidden Commissions

In April 2024, ABC's Four Corners aired "The Strata Trap" — a national investigation into the commissions, kickbacks and conflicts of interest that flow through the Australian strata management industry. The program estimated that owners corporations were collectively losing tens of millions of dollars annually to undisclosed commissions on insurance, building services, and contractor referrals.

The fallout has been steady and significant. In May 2025, NSW strata manager Michael Lee — featured in the program — became the first manager in NSW history to be banned for life from the industry, fined $11,000, with his company's licence cancelled and a further $22,000 penalty imposed. The NSW Government accelerated reforms targeting disclosure obligations. The Strata Community Association of NSW announced it would phase out insurance commissions in favour of a fee-for-service model from January 2026. The ACCC, the Owners Corporation Network, and the Australian Consumers Insurance Lobby have all called for further regulatory action.

For owners and committee members, the question is no longer whether the issues exist. It is whether your own building is exposed — and what to do about it.

This article walks through a practical audit of your strata manager's arrangements, the disclosure obligations that now apply under NSW law, the warning signs that should prompt deeper investigation, and the steps available to committees that find their building has been quietly handing money to its own service providers.

What the Investigation Actually Found

The Four Corners investigation, supported by industry whistleblowers and corporate records, identified several recurring patterns.

The first was undisclosed insurance commissions. Strata managers were receiving commissions of 15-25% on the building's annual insurance premium, paid by the broker, without those commissions being meaningfully disclosed to the owners corporation. For a building with a $100,000 annual insurance premium, this meant $15,000-$25,000 per year being paid to the strata manager — money that was, in effect, coming from the owners' levies but not appearing in the management fee.

The second was vertical integration. Several large strata management groups were operating as part of broader corporate structures that included insurance brokers, underwriting agencies, remediation consultants, and law firms. Work referred from the strata manager to these related entities generated revenue that flowed back through the corporate structure. The strata manager could legitimately claim the work had been outsourced to a third party — but the third party was, in commercial substance, the same business.

The third was contractor kickbacks. Strata managers were referring work to plumbers, electricians, gardeners, painters and other contractors who paid referral fees, equipment supply contracts, or other forms of indirect compensation back to the manager. Owners corporations were paying the contractor's quoted price; the contractor was paying the strata manager out of that price; and the manager's incentive was therefore to refer work to the highest-paying contractor, not the best-value one.

The fourth, in some cases, was outright misconduct. Charging fees for services not rendered, failing to obtain multiple quotes, signing contracts without OC approval, and in extreme cases — as with the Michael Lee matter — actively obstructing owners from voting at AGMs.

The Legal Framework: What's Required Under NSW Law

The legal framework, even before the 2025 reforms, contained meaningful protections. The problem was that disclosure was often technically met but practically invisible, and the consequences of breach were rarely enforced.

Under section 60 of the Strata Schemes Management Act 2015 (NSW), a strata manager must disclose, at each AGM, any commissions, training services, gifts or other benefits they have received in connection with the scheme. Under the Property and Stock Agents Regulation 2022, agents must comply with a code of conduct requiring them to act as fiduciaries to the owners corporation, not act in conflict with the OC's interests, and disclose any non-independent referrals.

The 2025 reforms, rolled out across February, July and October 2025, strengthened these obligations significantly. Under the amended section 57, a strata manager cannot receive a commission or training service that is not in line with the management agreement without first obtaining the owners corporation's written approval at a general meeting. The written explanation provided must include why the approval is in the OC's interest, the commission amount, and the prescribed details. Strata managers must also write to the OC as soon as practicable to disclose any connections with suppliers or interests in the scheme.

The October 2025 changes added further teeth: NSW Fair Trading was given investigation and enforcement powers including the ability to record persons, enter premises, and require documents and answers. Building managers were brought into a similar disclosure regime, and NCAT was given expanded powers to terminate or vary management agreements where the manager was found to be operating in conflict with their duties.

The April 2026 changes added Section 184 certificate disclosure, meaning that prospective buyers of a lot can now see, at the point of purchase, whether the OC has any compliance actions or orders against it. The transparency net is closing.

The Audit: Eight Questions to Ask

A proper audit of your strata manager's arrangements is not a forensic accounting exercise. It is a series of specific questions that, taken together, surface whether your building is exposed.

One: What insurance commissions has the strata manager received in the last twelve months? The amount, the broker, the underwriter, and the date of disclosure to the OC. If the strata manager cannot produce this information in writing within seven days, that is itself a finding.

Two: Are any of the building's regular service providers — insurance broker, plumber, electrician, gardener, cleaner, painter, fire safety contractor — owned by, related to, or commercially connected to the strata manager or their parent company? This is the question that surfaces vertical integration. The answer should be in writing and should specify the nature of any connection.

Three: How are quotes obtained for work over a specified threshold? Most management agreements require multiple quotes for work over a particular dollar value. Has this been complied with? Where the work has been awarded to a particular contractor, were two or more independent quotes actually sought, and are the alternative quotes on file?

Four: What contractors does the strata manager refer work to most frequently, and on what basis? A pattern of repeat referrals to a single contractor — particularly without a competitive tender process — warrants investigation.

Five: What does the management agreement actually say about commissions, kickbacks, and disclosure? Many older management agreements contain clauses that authorise the manager to receive commissions on insurance and other services, sometimes in language that owners did not pay attention to when they originally appointed the manager. Read the agreement.

Six: What was the basis for the most recent insurance renewal? Did the strata manager obtain quotes from multiple brokers, or only one? Did they present alternatives to the OC, or simply renew with the existing broker? Was the basis for the recommendation explained?

Seven: How does the strata manager's annual fee compare to market? This is harder to answer because strata management is not transparently priced. The Strata Community Association publishes general guidance, and several brokerage firms benchmark fees on a per-lot basis. A manager whose total income from your building (fees plus disclosed commissions) is materially above market is worth a closer look.

Eight: What does the strata manager's code of conduct disclosure look like in practice? Have they disclosed conflicts at each AGM? Have they sought OC approval before accepting commissions? Are the disclosures specific enough to be meaningful, or are they generic boilerplate?

Reading the Financial Records

The audit can be made significantly more useful by comparing the OC's expenditure to the strata manager's disclosed compensation.

If the OC is spending $80,000 per year with a single insurance broker, and the strata manager is receiving an annual commission disclosed at, say, $12,000 from that broker — the relationship is at minimum transparent. If the OC is spending the same amount and the strata manager has disclosed no commission at all, that is either a manager who has chosen not to participate in the commission system (which exists, and is increasingly common post-2024) or a disclosure failure.

Similarly, if the OC has spent $50,000 on plumbing repairs in the last year, all to the same plumber, and that plumber happens to also work on several other buildings managed by the same strata manager, the question is whether the plumber has any commercial connection to the manager, and whether the OC is getting market-rate pricing.

These comparisons are not difficult to make once you have the data. The challenge is obtaining the data — but under section 182 of the SSMA, every owner has the right to inspect the records of the owners corporation, including financial records, contracts and correspondence. The OC must make these available within a reasonable period for a prescribed fee.

What to Do With What You Find

If your audit surfaces concerns, the response options scale with the severity of what you've found.

For minor issues — a disclosure that should have been more specific, a quote process that wasn't quite followed — the most effective approach is usually a direct conversation with the strata manager, followed by a request that the matter be addressed at the next committee meeting. Most managers will respond to a clear question with clear evidence, and most issues at this level resolve without formal proceedings.

For meaningful issues — undisclosed commissions, related-party transactions that were not previously known, contractor referrals that don't appear to be at arm's length — the appropriate response is a formal written request from the committee to the manager, requiring full disclosure within a specified period, and reference of the matter to the OC's solicitor if the response is inadequate.

For serious issues — repeated breaches of disclosure, evidence of fees charged for services not provided, contracts entered into without OC authority — the response should be escalated. Options include a complaint to NSW Fair Trading (which since October 2025 has the investigation powers to take such complaints seriously), an application to NCAT under the expanded section that allows the Tribunal to terminate a management agreement, and in extreme cases, a referral to the Strata Community Association's complaints process or to NSW Police if criminal conduct is suspected.

Termination of the management agreement is also an option. The October 2025 reforms made this significantly easier where the manager is found to be operating in conflict with the OC's interests. The standard pathway is a special resolution at a general meeting, followed by either the manager's voluntary departure or, if necessary, an NCAT application.

The Industry Response

It would be wrong to suggest the entire strata management industry is compromised. Several large firms have moved to fee-for-service models, voluntarily disclose all commissions, and operate without related-party transactions. SCA NSW's announcement that members will phase out insurance commissions from January 2026 is part of an industry-led shift toward greater transparency.

The point is not that all managers are problems. The point is that owners corporations have, until very recently, had no real way to tell which were and which weren't — and the disclosure framework that now exists makes it possible, for the first time, to ask the question with the expectation of a clear answer.

The Other States

NSW has moved furthest, but the issue is national.

The Victorian expert panel report delivered in December 2025 made strengthening manager conduct one of its central recommendations, and 2026 is likely to see Victoria move toward the NSW-style framework. The other states are watching.

How UnitBuddy Helps

UnitBuddy's financial transparency dashboard surfaces the OC's spending by contractor, by category, and over time — making it visible at a glance whether work is concentrated with particular providers and whether spending patterns warrant investigation. The system also tracks strata manager disclosures by AGM, allows committees to record and compare quotes received for major expenditure, and produces an audit-ready record of every transaction the OC has authorised.

For committees taking the audit seriously, the platform turns what would otherwise be a manual exercise across years of records into a one-screen view of where the building's money is going.

The Four Corners investigation did not create the conflicts of interest in strata management. It made them visible. The buildings that benefit from this moment are the ones that use the visibility — to ask the questions, audit the arrangements, and demand the disclosure they have always been entitled to.