Owners Corporations Regulatory Impact Statement

30th June 2014

Owners Corporations Regulatory Impact Statement Regualtion and Policy Consumers Affairs Victoria Department of Justice GPO Box 123 MELBOURNE VIC 3001

Dear Sir/Madam,

SUBJECT: Response to Regulatory Impact Statement

As an Owners Corporation Management Company that was surveyed as part of the review of fees for OC Certificates and the subsequent Regulatory Impact Statement (RIS) we wish to make the following response and comments:

In relation to 2.1 -Nature of the problem (page 14)

We question the estimate on the percentage of vendors who have the capacity to provide owners corporation certificates themselves.

On what basis did LIV make the estimate?

In relation to 2.1.2 -Current Observations and Issues (pages 14 - 17)

Urgent Requests: - Agree in principle with concept and the need to clarify a charge, however also agree that complexity of the charging may lead to confusion. Further, should CAV decide on a charge that is not reasonable for the service required, then more OC Managers will elect not to provide the service. The current situation, where a consumer can elect to pay an agreed sum for the urgent service, will be lost and this will result in a detriment to consumers.

Multiple Certificates: - Agree in principle with the idea of charging a reduced fee for Certificates that fall within the criteria however criteria needs further clarification and the complexity of the charging may lead to confusion.

Currency of Certificates:-

The premise of this point assumes that because there is a duplication of information then the issuing of the certificate should be a faster or less onerous process. In reality any new certificate request is treated exactly as that, a new certificate, so all items are checked in the same manner and the same accompanying documents are provided.

Process of receiving request, obtaining payment, preparing documents, checking information, sending information, administering invoice etc. is as per an “original” request.

In relation to 2.1.3 Anticipated Issues (page 15)

The RIS refers to the potential for increased demand for request for records. The wording of, “scope for opportunistic behaviour” is regarded as emotive and negative. A more appropriate statement would have been:

“ to ensure the Owners Corporation does not charge an unreasonable fee a prescribed maximum fee should be implemented”

For clarity it should be noted that currently under the Owners Corporations Act 2006 the charging of the fee is in fact determined by THE OWNERS CORPORATION and NOT the Owners Corporation Manager.

We agree with the assumption that there is potential for an increased demand for requests for records.

3.1 Main Objective (page 20)

Agree with:

The assumption that if resource requirements are not considered then there would need to be fee increases elsewhere that are borne by others who have not obtained any benefit.

The fees set for obtaining owners corporation information should reflect the resources that an efficient owners corporation would incur to provide the information and charged such that only those who use the service pay a fee.

We wish to confirm that whilst the inspection of records is free for the person inspecting the records, as per the Owners Corporations Act 2006, costs associated with the inspection of records are payable by the Owners Corporation. The Owners Corporation Manager under their contract with the Owners Corporation charge for the time and resources required meeting the request.

With the assumption that there will be an increased demand for requests for records this will result in the Owners Corporation bearing the costs for individual requests.

2 | P a g e It is our belief that the request to obtain information purely for the completion of a sale of Land document should not be grouped and charged in the same manner as a request to inspect records for other purposes.

In our experience a request to inspect records can involve significant time, use of computer access, retrieval of documents from archives and allocation of staff time to oversee the viewing of the documents. This is clearly quite separate to supplying a standard document for Sale of Land.

It should also be noted that there are other matters that are addressed by Owners Corporation Managers that relate to services provided to individuals but are borne by the Owners Corporation as a whole due to their being no ability to charge the individual owner. The impact of these costs to the Owners Corporation as a whole can be very significant.

Examples:

Debt collection

Breach of rules by individuals

Individual claims on insurance policy

Request to view records

Given the point raised in 3.1 regarding “ the resources that an efficient Owners Corporation would incur to provide the information” we believe that while this was the intent of the RIS the resources required have not been accurately considered.

The reason for this is that when the information was being researched the questions that were asked in relation to requests to provide the OC register or other OC records were not couched around the proposed changes, the likely increase in demand for information, or the impact that an increased demand would have on resources.

As noted, an infrequent one off request for simple information held in electronic format can be handled with little impact on staff time and resources.

Generally we provide this information free of charge as the associated cost of providing the information is often outweighed by the resources required to manage the invoicing of the charge. If the demand increased then this situation would no longer be viable and additional charges would need to be applied.

Consideration should be given to the following:

Currently when an OC request is received in the majority of cases it is done through property information intermediaries/brokers who are well versed in what is required and have well developed electronic request and payment systems. These systems allow for smooth receipt, invoice and payment processes to occur and there is very little time spent discussing individual needs, determining invoice details, determining details of where information is to be sent and explaining requirement for pre- payment and ultimately managing receipt of payments.

3 | P a g e When receiving multiple requests for information from individuals who are not familiar with “what they require” the impact on time and resources becomes significant and we believe has not been duly considered in the RIS.

In 4.1.2 Data Collection and cost Assumptions. ( page 24)

The RIS then goes on to make assumptions based on average time to extract a register or record, these assumptions are then used to cost charges that could then be applied for the service.

There appears to have been NO consideration for the time and resources required for the management, processing of the request or the time taken to manage the payment process. (Refer above in 3.1) It would therefore appear to have failed in the objective of :

“The fees set for obtaining owners corporation information should reflect the resources that an efficient Owners Corporation would incur to provide the information and charged such that only those who use the service pay a fee.”

4.12 Other Options Considered (page 37)

Under paragraph 3 “prescribing a maximum fee………………………………………..corporation record.”

There is an assumption made that a fee could be charged in accordance with a request for an Owners Corporation record for information in relation to fees. Given that there is generally two requests for this information; one at the time of having to provide the information for the sale documents and then again just prior to the settlement of the property, does CAV envisage this being charged twice?

Yours sincerely, THE KNIGHT ALLIANCE

4 | P a g e