Netstrata Owners
OFT Investigation Update

13 July 2026

As we have previously communicated, for the past couple of years, the NSW Office of Fair Trading has been investigating Netstrata and its operations.

We have been advised that the next stage of this process is that proceedings have been filed against the company and Stephen Brell, our Managing Director. The claims are allegations. They have not been legally tested, and we will be defending them.

Stephen has announced he is standing aside while the court process plays out. Our Chairman, Ted Middleton will take over as interim Managing Director.

For the past two years, we have worked proactively with the Office of Fair Trading. We invited the independent review of our business, contributed toward its funding, and gave McGrathNicol full access to our systems, records and people. We have since implemented the review's recommendations in accordance with Fair Trading's advice, most of them ahead of schedule.

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.

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
Completed

A Risk & Compliance Manager has been appointed, formalising the compliance function. The Risk Framework has been updated. Netstrata is onboarding Protecht, a risk management platform. Implementation of the software is underway.

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
Completed

An annual review process for the Netstrata (and SIS) Risk Management Framework and risk matrices has been implemented. Interim updates are presented to and approved by the relevant boards as a necessary at each quarter's board meeting.

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

A Head of Corporate Affairs, Risk and Compliance Manager has been appointed, formalising the compliance function. The Risk Framework has been updated. Netstrata has onboarded Protecht, a risk management platform.

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 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 contractors 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 each respective strata plan under their management over the prior 12-month period.
Netstrata's Response
Not Adopted

Owners currently receive a breakdown of total fees and charges. As this is already disclosed, Netstrata has declined to adopt the recommendation, due to the repetitive nature of the task. NSW Fair Trading Commissioner Natasha Mann advised that this level of reporting was not necessary.

In addition to McGrathNicol's recommendations, Netstrata proactively and at the same time made or committed to many changes of its own, including:

  • a total zero-commission policy – commissions of any type, not only insurance – removed from all new agreements from 1 January 2026, among the first in the industry
  • real-time, drill-down access for owners to every invoice paid and processed for their scheme, through the Owners Portal and app – an industry first
  • a dedicated risk and compliance function with authority across every Netstrata brand
  • managing agency agreements redrafted to exceed legislative requirements
  • simpler Section 55 financial reports, expanded Section 60 disclosures, and new communications to committees before any related entity is engaged
  • trade compliance reports and strata manager remuneration declarations in AGM packs, backed by annual supplier attestations confirming Netstrata receives no incentives or commissions
  • independent experts engaged to strengthen specific processes, including an insurance actuary and specialist governance advisers
  • launching the Netstrata Learning Portal, a free strata education open to everyone, and the Netstrata Foundation, supporting community initiatives.

All of these changes are detailed on our Transparency Hub.

The management of your scheme continues as normal – your strata manager, your agreements and your services are unchanged.

As the legal process has commenced, Netstrata is very limited in what it can say. We will provide updates if and when we are able to do so.

If you do have any questions, please contact clientservices@netstrata.com.au.

Thank you for your continued trust in Netstrata.

Kind Regards,
Netstrata

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