NSW Fair Trading has launched criminal proceedings in the Supreme Court against Netstrata, one of NSW's largest strata management firms, alleging multiple breaches of statutory obligations under the Property and Stock Agents Act 2002 (NSW). The regulator alleges that Netstrata and its director and licensee in charge, Stephen John Brell, failed to adequately disclose or manage conflicts of interest involving related-party service providers and received undisclosed financial benefits. NSW Fair Trading also alleges the company provided false or misleading information to the regulator.
The firm manages approximately 1,000 strata properties across NSW, making it one of the state's dominant players in a sector affecting hundreds of thousands of apartment owners and residents.
For stakeholders in the strata space, the prosecution suggests a clearer signal about future regulatory expectations around disclosure and conflicts of interest, principles that - despite the interpretation of some brokers in the sector - could apply equally to insurance intermediaries.
The allegations centre on Netstrata's failure to disclose conflicts arising from related-party service providers and undisclosed financial benefits. These are precisely the issues that have drawn regulator scrutiny of strata insurance brokers in recent years, particularly around commissions, soft commissions and placement arrangements that may not be transparently communicated to owners corporations.
"Strata managing agents play a critical role in the governance and financial management of strata schemes across NSW," said acting NSW Fair Trading Commissioner Andrew Floro (pictured). "This prosecution aims to hold Netstrata and its Director and Licensee in Charge to account should the offences be established."
The prosecution reflects NSW's increasingly muscular approach to strata sector governance. Over the past two years, NSW Fair Trading has intensified investigations into conflicts of interest, undisclosed benefits and transparency failures - issues that have become focal points for ASIC, ACCC and state-based regulators examining how intermediaries across property and financial services operate.
Tyrone Shandiman, chair of ACIL and a strata insurance specialist with over 20 years' experience, said the action underscores regulatory momentum in the space.
"It's encouraging to see NSW Fair Trading continuing to take decisive action in the strata sector," Shandiman said in a LinkedIn post. "Of all the governments and regulators we've engaged with over recent years, NSW has been the most publicly active in tackling transparency, governance and conflicts of interest. Whether through legislative reform, investigations or enforcement, this demonstrates a clear commitment to improving consumer outcomes and strengthening confidence in the industry."
Read next: NSW government launches probe into Netstrata
For brokers, disclosure of conflicts of interest involving service providers - including preferred insurers, claims handlers, or brokers with shared ownership or financial relationships - has just become harder to dodge.
Netstrata and Brell have not yet entered pleas and the company has not publicly responded to the charges. On the firm's website, Brell, the former manageing director, is referred to as providing "Leadership at industry level" in his now former role as a president and board member of the NSW Strata Community Association (SCA). He resigned from his SCA roles in March 2024 following an ABC News report that accused Netstrata for charging excessive fees and raised concerns about third-party commissions and conflict disclosures.
NSW Fair Trading said the Supreme Court will hear the case at Queens Square, Sydney, on July 27 and 28.
