Hi Michael
I have not heard of this happening at other councils and would be quick to call Services NSW requiring them to desist immediately.
It is my understanding that NSW Government Agencies need to have an agreement in place to do business through Services NSW and unless your Council has entered into an agreement they have no place to act in the capacity outlined in your post.
If you wish I can escalate to the Office of Local Government and would be interested if other councils are also experiencing similar issues.
I hope this is helpful.
Regards,
Andrew
