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  • #10944

    Our strata manager is part of [a large group] which has just imposed a charge of over $500 to cover what it says are costs resulting from the new NSW strata legislation.

    [The] letter says this is in accordance with the NSW Strata Agency Agreement.

    This charge has come out of the blue and the funds were debited to our account before the advice … was received.

    A poor way to treat clients.

     

     

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  • #26516
    g-g
    Flatchatter

      Our strata manager attempted to do a similar thing – but when questioned what they were actually doing to ensure our scheme “complied” with the new legislation it turned out they were ‘consolidating bylaws into a word format‘.

      As Secretary of our large scheme, I was able to provide such a document for free – including LPI copies of registration (57 bylaws) – so that ended that.

      Perhaps you need to ask what it is your strata manager is actually doing? Then you can decide if the fee is fair and reasonable or not.

      I agree that managers are treating their clients badly when they apply extra fees without proper consultation.

      #26518

      This topic is also currently appearing on the OCN forum.

      My 16 block unit in NSW is also being charged a fee of $561 (including GST) without any notification to residents.

      The PICA group in conjunction with Urbanise is currently developing a cloud based management system which it intends to implement for all PICA companies.  It also intends to sell the technology to other strata management companies.

      Could this be part of the reason for the additional fee and is it legal to add this to management fees without notification.  There is nothing in our maanagement agreement that appears to cover the fee?

      #26542

      Since my last post I have done quite a lot of research on this fee.  

      After a delay the Strata manager of our scheme provided a copy of the letter from PICA (who own a large number of strata management agencies) which basically says that they are charging owners corporations for the cost of them upgrading their systems to comply with the new legislation.  They imply that the agency agreement allows them to charge this fee and it will be “included in your next financial statement”.  No approval required.  A legal opinion of the agency agreements appears to consider this is no legal.

      The PICA website states they have over 220,000 lots under management.  I will let you do the maths on how much revenue this will generate.  The management of financial records for schemes is just the beginning of what is planned and when they confirm the system works they plan is to try and on sell to unaffiliated companies.

      The secretary of our scheme only “vaguely recalled” receiving the letter and felt the cost would result in “economies of scale” (whatever he thinks that means).

      Does no one query what our strata managers are billing us for?  The only people who see this correspondence are committee members.  

      Would mere mortals who are just owners object if they were aware of this fee?  

      #26573
      Jimmy-T
      Keymaster

        From asking around it seems that mostly, if not only strata managers who are part of the PICA group are doing this.  Strata Choice, for instance, say adjusting to new laws is just part of their job and they are not charging schemes for that.

        The charges seem to vary and I suspect they are related to the number of units in the scheme.  If anyone has any figures – number of units v charges imposed, let’s have ’em.  Post them here or email them to mail@flatchat.com.au – either is good.

        The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
        #26574
        Lady Penelope
        Strataguru

          Have the PICA group outlined exactly what costs they are adjusting to?

          Pedant referred to a letter from PICA that stated that the abnormal fee was “for the cost of them upgrading their systems to comply with the new legislation”.

          Can PICA be pressed to outline exactly what they are?

          If the abnormal PICA charge is merely for a computer upgrade for their businesses then that is something that should be absorbed by the business without any additional impost on their clients.

          #26575
          Jimmy-T
          Keymaster

            I don’t know the exact wording but the thrust of the letter is that it’s because of their need to adjust to the new laws.

            The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
            #26605
            Jimmy-T
            Keymaster

              The following was sent to JimmyT by Peter Byrne, Executive General Manager Business Development and Marketing for the PICA Group.

              It is reproduced here unedited and without comment.

              Question 1:  How was the compliance fee charge calculated?

              • The fee was based on expenses incurred – over and above business-as-usual activities, to recover in part the significant and legitimate costs for the implementation of the new legislation requirements, across all relevant schemes, to ensure owners corporation compliance.
              • The reason for the charge was a conscious decision to be transparent in isolating the fee for legislation compliance only, rather than build it into future management fee (or other) increases which would’ve meant our customers bearing an ongoing cost.
              • As there is a certain amount of work to be done for each owners corporation to be compliant, the total cost (excluding GST) was based on a conservative number of resource hours, and allocated divided into 3 tiers by lot size:

              o   2-15 lots: $260 for approx. 1.5 hours

              o   16-50 lots: $510 for approx. 2.5 hours

              o   51+ lots: $690 for approx. 3.5 hours

              Question 2:  On what basis was the compliance fee charged?

              • The compliance fee is a legal and justifiable charge. 
              • At times extra services need to be provided in special circumstances.  The legislation services provided was over and above what we had to do to satisfy our own requirements to be compliant.
              • We believe that the amount we charged was much less than the charges we would have been entitled to charge on an hourly basis, and does not compensate the full amount of time and resources spent to ensure owners corporation compliance. 
              • Under schedule B and D, we have the right to charge for “additional services” as per the normal course of doing business.

              Question 3:  Shouldn’t ensuring our customers compliance be part of business as usual activity?

              • As strata managing agent it is our responsibility to ensure the owners corporation is compliant. 
              • We took the proactive stance of preparing for the legislation change two years in advance of it being introduced. 
              • Only the work that was incurred to ensure our customers are compliant was charged for.
              • As mentioned above, under schedule B and D we have the right to charge for “additional services”, as per the normal course of doing business.
              • If we calculated the compliance fee in isolation or per scheme, the charge would have been significantly higher i.e. calculated by hour, per scheme.  Instead we were able to leverage the size of our business, by gaining efficiencies across resources to benefit both us and our customers.

               

              Question 4: What value do our customers tangibly gain from paying the compliance fee?

              • Access to new master documents such as the “Statement of key financial information”.
              • Access to updated master documents:

              o   Terminology changes

              o   Section number alignment with the Acts

              o   Inclusion of new items required for certain documents

              o   The addition of new motions (e.g. declaration of training received and likely to be received, annual fire safety statement, by-law review), etc.

              o   Agendas, minutes, proxies, company nominees (over 1,000 new and upgraded templates)

              o   Section reports

              o   Financial reports

              o   Agency agreements (section reference, terminology changes and new compliance matters)

              o   More than 100 other documents that refer to a section of the Act or executive committee (e.g. welcome letters, by-laws, warning letters, etc.), that is new templates which the owners corporation can use, rather than addressing matters as they arise and charging per instance.

              • Risk prevention of potential consequences for the owners corporation not complying with the new legislation range from monetary penalties, failure of actions at NCAT, motions being challenged at meetings or being declared invalid or the owners and/or the committee members being found liable.

              Question 5: What else did we do (time not charged for) to ensure that the PICA Group is acting responsibly?

              • We reviewed the new Act and Regulations in detail which consisted of over 300 pages and took almost 10 months to complete the review.
              • We proactively engaged with key industry bodies such as the NSW Department of Fair Trading and Strata Community Australia (SCA) to lobby for beneficial and sensible changes on behalf of our customers.
              • A team of in-house strata specialists were appointed to assess the impact of the new legislation.  The outcome was a detailed reference document which our strata managers can access should they face a situation that requires reference to the new laws.
              • 23 easy to reference fact sheets were created.
              • External senior legal advisors were appointed to ensure the appropriate meeting and operational documentation was in place for full compliance.
              • Approximately 13,000 hours was spent on developing new processes and software solutions to meet the new requirements of this legislation.
              • Extensive training was provided to staff, owners and agents to ensure we offer the necessary guidance on how to navigate through these changes.
              • A project manager was allocated to ensure the smooth roll-out of changes impacting all stakeholders.
              The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
              #26611

              The same company is charging a $100 fee to all contractors and service providers to be put into their risk management database. If you don’t pay the fee then they will not issue a work order to you. There are thousands of contractors that provide services to the schemes they manage and all are required to pay up – do the math – they are reaping in millions of dollars.

              #26660

              While the details of charges and costs can continue to be debated, the purpose of the new legislation is to protect consumers…and no matter which way you look at it, it will require investment and expense across all industry players at some point or another to protect the owners corporations.

              Here’s what the Strata Community Australia (NSW) who represents over 75% of all strata lots in NSW communicated to their members: https://picagroup.com.au/strata-community-australia-sca-advise-changes-nsw-legislation-will-add-additional-costs-consumer/

              The PICA Group has been proactively responding to the changes for 2 years in advance of the new legislation being introduced, and we will continue to lead the way and work with our customers to ensure they remain compliant.

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