Netstrata
McGrathNicol Review & Outcomes

We understand that recent media coverage and regulatory scrutiny may have raised questions for owners. This page is designed to provide clear, transparent information about the independent review of Netstrata’s operations, the recommendations it made, and what has been done in response.

Following a series of media reports in 2024, Netstrata invited NSW Fair Trading to undertake an independent review of its operations. This was formalised through an enforceable undertaking, with advisory firm McGrathNicol appointed as the Independent Expert. The review was one of the most comprehensive ever conducted into an Australian strata management business.

Netstrata contributed $450,000 to fund the process and provided full access to systems, documentation and personnel. The scope of the review was determined by NSW Fair Trading and included governance, compliance, service delivery, commercial arrangements, and disclosure practices.

The McGrathNicol Review is extensive, and we are not seeking to condense or summarise it, as doing so could be perceived as selective. You can read the summary report here.

Both before, throughout and after the report process, Netstrata has been thoroughly reviewing every aspect of our business. We engaged leading consultants, legal advisors, actuaries and governance experts to review our operations – from compliance and disclosure to systems, training, and client service. This led to an immense program of reform. These reforms were not purely reactive; they built on a long-standing commitment to innovation, and were accelerated to ensure Netstrata achieves its aim of setting the benchmark for best-practise strata management.

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McGrathNicol's Recommendations

In its report, McGrathNicol provided 22 recommendations for how Netstrata could change or improve its operations. These recommendations were not a response to substantiated misconduct or ethical breaches, nor did they validate the allegations published in media coverage. Instead, they provided a practical roadmap for strengthening Netstrata’s governance, compliance and transparency frameworks.

Netstrata fully implemented 17 of the 22 recommendations ahead of schedule.

As for the remaining:

  • Three are in progress and expected to be completed by the end of Q1 2026 – including enhancements to the Risk Management Framework and the integration of governance KPIs into employment contracts.
  • Two recommendations were assessed as unnecessary: one related to historical data availability for a 30-year-old strata scheme (Recommendation 15), and another proposing an annual fee summary per strata manager (Recommendation 22), which was deemed administratively burdensome and not required following clarification with NSW Fair Trading.

The specific recommendations and our actions and responses are set out in the table below.

No.
Recommendation
Netstrata's Response
1.
Recommendation
Netstrata should implement firm wide Conflict of Interest and Code of Conduct training to all staff and subsidiaries.
Netstrata's Response
Completed

Training has been mandated across all staff and subsidiaries. It has been embedded in our onboarding and compliance processes, including Netstrata's annual training plan.

2.
Recommendation
Netstrata should require all staff to sign annual Conflict of Interest declarations identifying any potential and actual conflicts of interest.
Netstrata's Response
Completed

Annual declarations are now required from all employees. A Conflict of Interest Register was created in May 2024 and is regularly updated.

3.
Recommendation
Netstrata should implement version control processes for all policies and procedures.
Netstrata's Response
Completed

Version control protocols have been introduced across all governance and operational documents.

4.
Recommendation
Netstrata should enhance the current Whistleblower Policy to identify the name of the Whistleblower Protection Officer and make the policy readily available to staff.
Netstrata's Response
Completed

A named Whistleblower Protection Officer has been appointed and the policy is now accessible to all staff.

5.
Recommendation
Netstrata should update the Employee Handbook to include additional key policies including the Code of Conduct, Whistleblower and Conflict of Interest Policy.
Netstrata's Response
Completed

The Employee Handbook has been updated to include all relevant policies and distributed to staff.

6.
Recommendation
Netstrata should improve the complaints section of the company website to provide customers with a greater understanding of the dispute resolution process and escalation pathways.
Netstrata's Response
Completed

Website content has been revised to clearly outline complaints handling and escalation options. Additional materials included in AGM packs.

7.
Recommendation
Netstrata should include customer complaints as a standing agenda item in the monthly executive meetings and quarterly Board meetings so that senior executives have transparency and visibility over the level and nature of the complaints.
Netstrata's Response
Completed

Complaints are now reviewed at both executive and board levels. This is a standing item in governance meetings.

8.
Recommendation
Netstrata should give responsibility for the ownership of customer complaints to the compliance function to ensure independence.
Netstrata's Response
Completed

Oversight of complaints has been formally assigned to the Risk & Compliance Manager, who commenced in June 2025.

9.
Recommendation
Netstrata should implement a process whereby staff perform an annual attestation of compliance to key policies and procedures so that they are aware of their personal and professional obligations.
Netstrata's Response
Completed

Annual compliance attestations are now required from all staff. This is tracked and reviewed by the compliance function.

10.
Recommendation
Netstrata (and SIS) Risk Management Framework policy and risk matrices should be updated and tailored to the requirements of the organisation with the Risk Management Framework shifting to the responsibility of the compliance function once formed.
Netstrata's Response
In Progress

Risk & Compliance Manager appointed. The Risk Framework has been updated. Netstrata is onboarding a best practice risk management platform. Completion expected by Q1 FY26.

11.
Recommendation
Netstrata (and SIS) should develop a timetable for the Risk Management Framework and risk register (matrix) to be regularly reviewed as part of the governance oversight function.
Netstrata's Response
In Progress

Timetable development is underway. Governance oversight protocols being embedded. Completion expected by Q1 FY26.

12.
Recommendation
Netstrata should review the Strata Manager remuneration framework to include and formalise the inclusion of governance and compliance key performance indicators.
Netstrata's Response
In Progress

KPIs have been developed and reviewed. Conversations are ongoing with NSW Fair Trading regarding how to best implement this.

13.
Recommendation
Netstrata should enhance existing disclosures around its fees and disbursements within its Strata Management Agency Agreements to include how Strata Managers are remunerated including the receipt of a percentage of any fees generated from add-on fees charged to customers and generated through new building acquisition commissions.
Netstrata's Response
Completed

Agency agreements have been updated to include remuneration disclosures. AGM notices now include additional explanatory material.

14.
Recommendation
Netstrata should rotate auditors and consider implementing a panel of auditors from which it randomly selects auditors engaged for strata plans.
Netstrata's Response
Completed

Auditor rotation protocols have been adopted. A panel system is now in place for strata plan audits.

15.
Recommendation
Netstrata should develop improved systems that provide for a complete source of truth for all strata plans under their management containing pertinent key information.
Netstrata's Response
Not Adopted

Netstrata could not adopt this recommendation for technical reasons. The issue raised was based on a single example involving a 30-year-old scheme. The First AGM date for that scheme was unavailable due to record retention limits (7 years). When Netstrata’s took over the scheme from another strata management company, the original records were not provided. Netstrata considers this an isolated case and not reflective of any kind of systemic failure.

However, Netstrata’s Owners Portal has recently been upgraded to provide owners with real-time, access to every financial record and invoice relating to their scheme. This makes it the most complete source of truth of any strata company in Australia, and may even be a world first in strata management. This required significant investment, alignment of myriad systems, and complex upgrades to accounting software. This vision has been on the company’s roadmap for decades, and under development for many years, before recent industry scrutiny or the McGrathNicol review.

16.
Recommendation
Netstrata should include additional explanatory material in their meeting agenda that clearly outlines the obligation under Section 102 of the SSMA requiring a Strata Manager to obtain at least two quotes for non-urgent work exceeding $30,000 and affording the Owners Corporation the option to either approve the engagement of the selected contractor or request Netstrata to undertake further attempts to obtain additional quotes.
Netstrata's Response
Completed

Meeting agenda templates have been updated to include explanatory material regarding Section 102 obligations. This is now standard practice.

17.
Recommendation
Netstrata should commence a review into the necessity of Prime undertaking multiple searches of the same entity during the same period.
Netstrata's Response
Completed

Netstrata has ceased its arrangement with Prime. Trade compliance checks are now conducted in-house to avoid duplication and improve cost-efficiency.

18.
Recommendation
Netstrata should improve transparency when invoicing an external vendor in which they have a Commercial Arrangement via additional disclosures made to Owners Corporations within its annual reporting obligations. For example, an invoice associated with compiling records for a vendor that has been engaged to perform work for a strata plan should be disclosed to the relevant strata plan as it creates the perception that Netstrata has indirectly benefitted.
Netstrata's Response
Completed

Additional disclosures have been introduced in annual reporting and Section 60 documentation. Contractor attestations have also been implemented.

19.
Recommendation
Netstrata should implement additional controls to assist in compliance with Section 102 of the SSMA by contractors who are aware of Netstrata’s legislative responsibility in engaging contactors for non-urgent work being incurred in excess of $30,000. This may include a contractor engagement form that sets out expectations such as accuracy of quotations, provision of ongoing and timely updates and instructions not to exceed designated financial thresholds without approval.
Netstrata's Response
Completed

Contractor engagement protocols have been revised. New forms and expectations are now issued to vendors, including financial thresholds and quotation standards.

20.
Recommendation
Netstrata should undertake a review of all agreements with contractors inherited from arrangements entered into by predecessor Strata Managers or developers to determine the services provided represent fair market value and are in the best interests of respective Owners Corporations.
Netstrata's Response
Completed

Netstrata has instituted an ongoing review process for inherited contractor agreements. Reviews are conducted at renewal or expiry to ensure market value and alignment with owners’ interests.

21.
Recommendation
Netstrata should improve transparency around Commercial Arrangements, by providing additional disclosures to Owners Corporations as to specific referral commissions it may receive and additional fees that it may indirectly receive from vendors.
Netstrata's Response
Completed

Section 60 reports and AGM packs now include disclosures of referral commissions and indirect fees. Contractor attestations reinforce transparency.

22.
Recommendation
Netstrata should improve the transparency of the Strata Managers’ fee structure. Specifically, it should issue an annual fee summary report with tailored remuneration to
Netstrata's Response
Not Adopted

Netstrata declined to adopt this recommendation, citing administrative burden and duplication. Owners already receive a breakdown of total fees and charges. NSW Fair Trading Commissioner Natasha Mann advised that this level of reporting was not necessary. Netstrata considers its current disclosures sufficient.

Industry Context

This review was commissioned by NSW Fair Trading as part of a broader effort to raise standards across the strata management sector. Netstrata was the first company to undergo this level of scrutiny, and the findings are now helping inform industry-wide improvements.

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Additional Reforms

Beyond the recommendations, Netstrata has implemented a range of voluntary reforms, including:

  • Moving to a business model where we do not accept commissions of any type across the Netstrata business, or any of our subsidiaries or related businesses – beginning with phasing out commissions on all new agreements from 1 January 2026
  • Significantly upgrading our Owners Portal to integrate fully with our accounting software, to now provide owners with ‘drill-down’ access to all invoices relating to their schemes in real-time – a first in the Australian strata sector, and perhaps the world
  • Ending our arrangement with Prime and bringing compliance checks in-house
  • Overhauling and simplifying our Management Agency Agreements
  • Updating Section 55 and 60 disclosures
  • Creating a formal Conflict of Interest Policy and register
  • Introducing contractor attestations and enhanced AGM reporting
  • Appointing a Head of Risk & Compliance and a Senior Client Service Manager
  • Adopting the Strata Community Association’s best practice guidelines for insurance
  • Implementing all agreed McGrathNicol recommendations
  • Launching the Netstrata Learning Portal – our free public education platform for owners, committees and the public

All of these can be explored in further detail on our Initiatives & Reforms page.

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Looking Ahead

‍Netstrata acknowledges that aspects of its systems and governance did not keep pace with its growth. The company has taken decisive steps to address this and remains committed to transparency, accountability and continuous improvement.

We welcome ongoing dialogue with owners and stakeholders, and will continue to share updates as further reforms are delivered.

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