How Generative AI is Reshaping Community Scheme Management,
And What It Means
By Professor Graham Paddock
Modern generative artificial intelligence is not just another technology trend. It represents the culmination of decades of digital transformation: the internet’s capacity to aggregate information, the exponential growth of computer memory and processing power, and the capacity of large language models (LLMs) to find patterns in “big data.” These developments are now fundamentally changing how community scheme management operates and what stakeholders expect.
What AI Brings to the Table
Building on a digital foundation that began in the mid-1980s with accounting software and word processors — and which has since progressed through cloud-based management platforms widely adopted during the Covid-19 lockdowns — AI now delivers capabilities that seemed out of reach just a few years ago:
- Document Analysis: Lightning-fast summarisation of AGM packs and financial statements.
- Anomaly Detection: Automated identification of budget irregularities and payment pattern issues.
- Predictive Insights: Analysis of historical data to uncover likely future trends.
- Plain English Interfaces: Complex financial statements, legal documents, and technical reports can now be interpreted and explained in ordinary language, in writing or speech.
The result? Trustees and owners can interrogate levy schedules, analyse spending patterns, and understand governance documents before setting foot in a meeting.
The Knowledge Arms Race
This democratisation of analytical tools changes the dynamic of scheme governance. Trustees and owners can now:
- Cross-reference scheme rules against legislation and case law.
- Analyse multi-year spending trends.
- Identify potential legal, financial, engineering, and compliance issues.
- Generate pointed questions about every aspect of management.
When stakeholders arrive at meetings equipped with AI-generated analysis, they will expect managing agents to operate at the same level of sophistication.
Legal Implications and Professional Standards
For trustees and managing agents, this evolution raises several key considerations:
- Enhanced Due Diligence: AI tools expose issues that previously went unnoticed.
- Professional Competence: Those who cannot match AI-empowered stakeholders’ analytical capability may be judged incompetent — regardless of background qualifications. Contentious email and other digitised communications will regularly be analysed by AI. The baseline fiduciary-like duties of scheme executives under CSOS General Regulation 14(1)—to “act honestly and in good faith,” and “exercise reasonable care, skill and diligence”—may well be interpreted to require the use of generally available AI tools.
- Regulatory Compliance: The duties imposed on bodies corporate by law and their governance documents, e.g. keeping books of account, preparing annual financial statements, and maintaining common/communal property, will increasingly be tested by AI. Regulators themselves may adopt AI to scrutinise compliance.
The New Managing Agent Profile
The managing agent of the future will be very different:
- From Administrator to Strategist: Basic clerical tasks such as levy statements will be fully commoditised. Value will lie in strategic interpretation, risk management, and building trust.
- From Task Executor to Interpreter: Agents must explain anomalies, resolve governance disputes, and navigate legal frameworks in language that trustees and owners can understand.
Essential Adaptation Strategies
To remain credible and competitive, managing agents will need to:
- Invest in AI-compatible infrastructure and document management systems.
- Develop expertise in prompting, interpreting, and validating AI outputs.
- Focus on advisory rather than clerical services.
- Embrace transparent, auditable processes that withstand scrutiny by both trustees and regulators.
Ethical and Risk Considerations
Integration of AI into scheme management brings challenges as well as benefits:
- Data Privacy: Compliance with POPIA when handling scheme documents.
- Transparency: Clear audit trails for AI-assisted decisions.
- Persuasive Manipulation: AI’s capacity to make partisan arguments appear extremely compelling means owners and trustees may present sophisticated but one-sided cases to managing agents, requiring enhanced critical analysis skills to identify bias and incomplete or fundamentally flawed reasoning
- Professional Responsibility: Defining accountability when AI produces errors.
These challenges highlight that AI is not a substitute for professional judgment, but a tool that amplifies it.
The Bottom Line
AI represents both disruption and opportunity. Managing agents who treat it as a partner in service delivery will thrive; those who resist risk losing credibility. The future belongs to professionals who can harness AI’s analytical power while offering the strategic insight, ethical guidance, and problem-solving that only human expertise can provide. This is the direction in which the profession is moving.
The revolution is already here. The question is no longer whether to adapt, but how quickly — and how effectively — managing agents, trustees, and other stakeholders will equip themselves for the new reality.
Article reference: Paddocks Press: Volume 20, Issue 07
This article is published under the Creative Commons Attribution license.
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