PEXA chief customer and commercial officer Les Vance
Electronic conveyancing company PEXA is not giving up its monopoly without a fight, arguing at an investor presentation yesterday that interoperability in the e-conveyancing market is a “complex and challenged program” whose likely benefits have been significantly overstated.
Sometimes viewed as recalcitrant on this issue, the company appears to have the support of the Australian Banking Association, which has its own concerns about the e-conveyancing interoperability program.
PEXA pioneered the e-conveyancing market in Australia, which now operates in all states and territories except Tasmania and the Northern Territory. It claims a 90 per cent share of the processing of all property transfers in the country.
The challenger is Sympli Australia, founded in 2018, which is backed by the Australian Securities Exchange and tech company InfoTrack. PEXA and Sympli are the only licensed electronic lodgement network operators (ELNOs) in the Australian market.
Interoperability, which allows the ELNOs to host parties participating in the same transaction, is government policy.
The decision to develop national interoperability specifications for Australia’s electronic conveyancing system was taken by a group of Commonwealth, state and territory ministers and industry representatives in March 2021.
In September, industry participants conducted an interoperability trial involving two refinancing transactions relating to properties in Queensland. Commonwealth Bank and NAB were the participating banks.
The Australian Registrars’ National Electronic Conveyancing Council, which administers the regulatory framework for e-conveyancing, rated the trial a success and subsequently set provisional dates for the completion of the interoperability rollout by the end of 2025.
In contrast to ARNECC’s statement that the trial represented a “critical milestone” in the development of an interoperable e-conveyancing system, PEXA chief customer and commercial officer Les Vance told investors at yesterday’s presentation that the pilot confirmed that “interoperability is far more complex to design, execute and build than was presented and assumed at the start”.
Vance said: “The original benefits were significantly overstated and the risk, costs and adverse impacts for stakeholders are significantly higher than represented.
“We remain of the view that the policy is flawed and that the pilot transaction provides a suitable point, still early in the overall program, to have a proper review of the policy.”
Vance also cited “recent commentary” from the Australian Banking Association that the interoperability program would not meet banks’ requirements.
Banking Day sought clarification from the ABA about its position. A spokesperson said: “The ABA attended the minister’s operability roundtable on 9 November and made it clear that the ABA supports competition and acknowledges the efforts of ARNECC to progress interoperability.
“However, the ABA also made it explicitly clear that our support for the program is strictly contingent on e-conveyancing transactions under interoperability being substantively the same as those under a non-interoperable framework – that is, customers having access to the same levels of functionality.
“It is not clear to the ABA that this can be achieved under the current framework. ARNECC themselves have stated they are not the appropriate form for detailed information about end-to-end settlement flows and impacts to be developed and shared.
“For banks and borrowers, development of interoperability and financial settlement are inextricably linked and must be considered together. The ABA is meeting ARNECC very soon to discuss our views in more detail.”