ABA backs PEXA monopoly

The Australian Banking Association has come out forcefully for a rethink on years of endeavour to foster competition in e-conveyancing, effectively falling in with the lazy option of consolidating the position of PEXA as monopoly provider.

“Given the passage of time, the Interoperability Program model should be reviewed” is one of the first sub-headings in the ABA’s submission to the Senate Economics References Committee’s inquiry into Micro-competition opportunities in the Australian economy in relation to eConveyancing.

Coalition senators agitated for the establishment of this inquiry, in part, in response to lobbying and reporting (including in Banking Day) around the dismay by PEXA’s emerging competitors, such as Sympli, over the lack of progress by the Australian Registrar National Electronic Conveyancing Council (ARNECC) around the IOP, an industry reform effort that’s been wandering for more than five years.

In 2024, the ABA noted, ARNECC committed to a review of the IOP program, 

“ABA and banks constructively participated in the review and provided our feedback to help ensure the program’s design was fit for purpose. 

“The outcome of this review was released earlier this year – a recommended a further review into the program, and the proposed completion of a second cost benefit analysis.”

The frustration is natural enough, but the ABA’s thinking is curiously and unashamedly aligned with that of PEXA.

“Given the passage of time since the reform was first announced and its inability to deliver an end-state, the ABA believes it is now the time for ARNECC to consider alternative models that will genuinely deliver customer uplift and make it easier and cheaper for customers to settle on property, while introducing competition into the eConveyancing market” the ABA argued.

“Different models for IOP were considered at the beginning of the reform. 

“One example is the Infrastructure Model, which involved a single registration and payment process provided by the incumbent [operator], with other operators differentiating on the user facing services offered to subscribers. 

“Another viable alternative is enhanced price regulation, which could achieve similar cost savings for consumers without the complexities and risks associated with
[interoperability]”

The ABA said previous cost benefit analyses have cited relatively modest cost savings via the IOP.

“If PEXA were to reduce prices by 7.5 per cent consumers would save $8.56 per transfer – a relatively modest reduction in cost that has yet to be realised.”

Among its ‘key recommendations’ the BA called into question “whether interoperability is the most effective, efficient, and safe way to improve consumer outcomes.”

IPART, the NSW competition regulator, which has been heavily involved inn this subject for years, argued in its submission that ARNECC should ask the Australian Treasury to request the ACCC “to immediately conduct a comprehensive review of the current price control arrangements relating to eConveyancing.

“If the ACCC does not have capacity to undertake this review in a timely manner, ARNECC should consider approaching the Australian Treasury to request that the Commonwealth Productivity Commission undertake this review and report its findings publicly.”

IPART further called for ARNECC to develop and publish a detailed industry roadmap for achieving the launch of interoperability by December 2025.

Commonwealth Bank in its submission told the committee, “CBA utilises both PEXA and Sympli to facilitate standalone mortgages and discharges. We are looking to
expand our usage of Sympli and have committed to a refinance pilot later this year. 

“Further work will continue as Sympli expands its capabilities.”

CBA also aired its concerns around risks of failures in financial settlement.

“The focus of ARNECC’s interoperability program to date has been limited to the lodgement process, being the exchange of title” CBA said. 

“The financial settlement process, which is critical for banks in a conveyancing
transaction, has not yet been considered or solved for. As such, issues such as the accountabilities between operators when payment flows are incorrect have not been considered within ARNECC’s interoperability program.

“A unified body with authority over both title exchange and financial settlement is critical to enabling banks to participate in an interoperable system.”

Philip Joyce, CEO of Sympli told Banking Day: “The ABA are missing two critical facts in their submission. 

1) There is a huge risk of a single point of failure with an entrenched monopoly, and 

2) The banks are stopping genuine choice and competition benefits for tens of thousands of small legal businesses by blocking this reform. 

“The Senate Committee will undoubtedly put those points under scrutiny and question why the banks haven’t held the incumbent to account to provide answers to the highly solvable issues they note in their paper.”