Australia's largest strata insurance broker has been caught misleading its clients, burying an offer of cheaper insurance from a rival company, and instead recommending a more expensive policy from its own wholly owned firm.

The revelation — described as "of concern" by the Australian Competition and Consumer Commission — lifts the veil on the growing power of Steadfast Group, a $7 billion publicly traded insurance giant. 

The company presently brokers 40 per cent, and writes 55 per cent, of Australia's strata policies.

A Four Corners investigation has also established the company has been part of opaque schemes to channel insurance kickbacks to strata management firms — without disclosing the schemes to the apartment owners from whom the money ultimately comes.

Steadfast Group's chief executive, Robert Kelly, has conceded apartment owners are often none the wiser about these schemes.

"I think that's the gap," he said. "They have no idea."

Steadfast and its subsidiaries have deals with some of the country's largest strata firms, including PICA, which has more than 200,000 lots under management, and Bright & Duggan, which manages schemes containing 85,000 apartments and townhouses.

Now, ACCC chair Gina Cass-Gottlieb has called for all strata insurance commissions to be banned and condemned undisclosed arrangements as deceptive.

Ms Cass-Gottlieb said all such payments were driving up the cost of insurance.

"There are a set of hidden arrangements that are … not disclosed, but also circumvent disclosure of fees," she said.

"The receipt of hidden payments and commissions of whatever nature is misleading consumers."

The revelations come after the ABC in March exposed the exorbitant fees and secret kickbacks that had long been received by one of the country's most high-profile strata firms, Netstrata.

As a result, the company's boss, Stephen Brell, was forced to stand down from his position as the NSW president of the industry peak body, the Strata Community Association, and authorities established an inquiry into his firm's practices.

The NSW government also unveiled new legislation it claimed would strengthen oversight of the industry and beef up strata managers' disclosure requirements.

Ms Cass-Gottlieb told Four Corners the state government had not gone far enough.

"A solution that is about imposing … enhanced disclosure obligations doesn't get to the root of the problem, which is the financial incentive," she said.

"Even with the disclosure, the strata manager, the insurance broker, continues to have the financial incentive, and that includes a financial incentive not to recommend lower priced insurance."

Former strata and insurance executive David Hampton said: "At the end of the day, the consumer always ends up paying for any conflicts of interest that generate more income for the participants."

Mr Hampton was chief executive of insurance giant CHU in 2015 when Steadfast announced it would acquire the company.

"The problem with strata is that there's too much of insurance costs that's allocated to reward the people who sell and service the product … it could be up to 40 per cent … how do they get away with that?"

David Wellman, the owner of a Sydney strata management firm, said owners' corporations would be unaware of the deals done between their strata managers and Steadfast companies.

"Quite frankly, [these deals] are shrouded in secrecy," he said. 

Typically, these arrangements have involved the establishment of new brokerage firms in which both Steadfast and a suite of strata managers hold shares; while these firms are run by Steadfast, strata managers trouser a share of the broker fees apartment owners pay.

But because these earnings are not classified as "commissions", which can by law require disclosure, many strata managers do not divulge their share of the joint venture's profits.

"Any agent embroiled in those types of JV [joint venture] enterprise deals where they're bypassing their obligations to disclose insurance [revenue], then they are in effect distorting the true cost of management services," he said.

"Because ultimately, they can say on the one hand, hey, we're not getting a commission. And they can underwrite a very low base fee to attract the client in. But in actual fact, they are getting a commission, just through a different form."

Wellman's firm, like the rest of the industry, also earns insurance commissions of up to 20 per cent, which he says are fully disclosed to his clients.

Mr Wellman told Four Corners he had been approached on several occasions to be part of such schemes, and his business offered hundreds of thousands of dollars in an up-front cash payment.

"If I was to take that arrangement to our clients, for example, I can't see anyone agreeing to that type of arrangement."

Steadfast Group chief executive Robert Kelly denied these schemes had been designed to bypass strata managers' current disclosure obligations, but conceded the arrangements were not transparent.

He said responsibility for disclosing these schemes did not lie with Steadfast.

"At law, you're only obliged to give the information about how much you win, how much you earn, and who you pay remuneration to, to the person that gives you the authority to place the business," he said.

"And the strata manager is the one who in fact gives the authority, authorises the insurance, and sends the cheque.

"The reality is we have contractual obligations at law to deal only with the people who give us the instructions."

Since Steadfast floated on the Australian Securities Exchange more than a decade ago, it has spent more than $1.6 billion on the acquisition of insurance brokers and underwriters.

Its strata business now generates more than 20 per cent of its profit — or $43 million last year.

But under Australia's current competition rules, Steadfast had no obligation to notify the regulator of any of these corporate takeovers.

"The growth of Steadfast has occurred below the radar," Ms Cass-Gottlieb said.

"It has amassed a very significant market position with almost no notifications to the ACCC. In the past 10 years, they have been less than five, and in the past three years, one notification, and that notification was only very shortly before they were completing it.

"This identifies a critical problem with our current informal voluntary merger notification regime."

Ms Cass-Gottlieb said "Steadfast is a good example" of why Australia needed new laws to make such merger and acquisition notifications mandatory.

"We are not able to review all the transactions we need to review in the community interest, which means we are not able to prevent those transactions which are anti-competitive because we don't see them," she said.

Now, Four Corners has uncovered a case concerning the strata insurance for a building on Sydney's lower north shore which raises questions about the company's market dominance.

Earlier this year, the building's owners' corporation received a report from Body Corporate Brokers, a Steadfast company, which stated there was only one underwriter willing to offer them a policy.

That underwriter happened to be CHU — also owned by Steadfast.

In fact, Four Corners has confirmed a rival underwriter, Strata Community Insurance (SCI), had offered the broker an insurance policy that would have been thousands of dollars cheaper for the owners — but that offer was never passed on to them.

The original broker's report had instead claimed that SCI's quote had been "withdrawn".

SCI managing director Paul Keating told Four Corners this was false.

"SCI did not withdraw its offer of insurance dated 20 February 2024 provided to Body Corporate Brokers (BCB). This has been confirmed by a review of all relevant communications prior to the date we understand that insurance terms were presented by BCB to their client."

The imbroglio came to light because one of the building's apartment owners, Mark Swain, had contacted SCI directly to check whether it would offer a quote.

He received one which was $3,200 cheaper.

"I expect the broker to go around the market and furnish us with different options," he said.

"And this document that came back from the broker said, we cannot provide you those other options, which was factually incorrect in the end."

After Mr Swain reported the SCI offer to his strata manager, Body Corporate Brokers produced a second renewal proposal that contained a cheaper SCI policy .

When these details were put to Steadfast Group's Mr Kelly, he strenuously denied the first BCB report was false.

"That's not true," he said. "SCI is telling a great lie about that. In fact, a lot of what SCI says about our business is completely false."

When told that SCI had confirmed it did not withdraw the offer, Mr Kelly said: "Well, they're telling you lies. It wouldn't be the first time."

Asked whether he had "a document which will show SCI withdrawing its offer", Mr Kelly said: "Yes, absolutely."

Neither he, nor his company, ever produced that document.

Four Corners has forensically traced the history of the affair.

When Steadfast's broker was urged by owners to contact SCI again for a quote, there was no mention in the correspondence between the two companies of the first policy offer having been withdrawn.

Having failed to produce any documentary evidence to support Mr Kelly's denials, Steadfast offered this explanation: "The [broker's] account executive advises that based on either a conversation with SCI or based on SCI's usual requirements, the SCI quote was withdrawn due to the lack of confirmation of [defect] work being completed."

Mr Keating said there were no records held at his company of any such verbal conversation, and "no contact between our quote of 20th February and their email of 26th March", when the broker requested a second quote.

"No mention of withdrawal, no mention of any issues with building works," Mr Keating said.

"Strata Community Insurance has not provided BCB, or any other insurance broker, with authority to withdraw insurance quotes."

"When new information surfaces that would be relevant to a decision to insure, our 'usual requirements' are totally aligned with standard industry practices. That is, to be told immediately about this new information, consistent with the 'duty of disclosure' and/or 'duty to not misrepresent' requirements."

"Once disclosed, Strata Community Insurance would then consider this new information, and decide whether any existing offer to insure would need to be revised."

Mr Keating said he intended to take the matter up with Body Corporate Brokers: "[We] are waiting for a meeting to be scheduled to address this case."

Now, the head of the Australian Competition and Consumer Commission said Steadfast's conduct was troubling.

"On that description, you have [a] misleading representation, and also a failure to act in the best interests of the customer," Ms Cass-Gottlieb said.

"It's conduct of concern, definitely."

Watch Four Corners' full investigation The Strata Trap from 8:30pm tonight on ABC TV and ABC iview.