Conveyancers back proposal to regulate digital platform

A PROPOSAL by the NSW Independent Pricing and Regulatory Tribunal (IPART) to rein in fees charged by digital property platform PEXA has been welcomed by the state’s conveyancers.

Last week, IPART said it wanted to keep regulating Electronic Lodgment Network Operators (ELNO) service fees in a move that would result in a fall in transfer fees, including single and multiple title transfers, with and without financial settlement.

The reduction will likely apply to charges to legal practitioners, while financial institutions will not see their fees change.

PEXA, which dominates the $300 million Australian settlement market, said the draft recommendation, if it goes ahead, will mean an estimated $70 million hit to FY28 revenue.

Jennie Tonner, owner of Sydney’s Cremorne Conveyancing and president of the Australian Institute of Conveyancers NSW division, supported IPART’s move in the space.

“It is a step in the right direction but they (PEXA) still have a monopoly on the market,” Tonner told AC.

However, she urged IPART to consider reducing fees on all PEXA charges “not just those passed onto the legal practitioners”.

“The reduction should also apply to the fee charged to banks and mortgagees as these fees ultimately get passed on to the customer as well,” she said.

While the controls would help keep a lid on prices, Tonner said conveyancers across the state would be best served by a revival of stalled interoperability reforms.

The long-awaited reforms took a hit in April after the push to bolster competition via interoperability – changes that would allow practitioners on ELNOs to complete transactions with entities on other platforms – was shelved by regulator ARNECC and backed by lawmakers.

“Until there’s interoperability or competition, they’re (PEXA) still making substantial profits in this market,” Tonner said.

IPART said with interoperability reforms shelved, it was likely that the econveyancing market would remain concentrated, prompting its pricing clampdown.

“The most common transactions are property transfers, usually when a property is sold, and refinances, when a property owner changes its mortgage provider. Only two operators currently provide these services in Australia, PEXA and Sympli,” IPART tribunal member Sharon Henrick said in a statement.

“PEXA’s transfer fees are its highest fees. They do not appear to be aligned with the costs of providing the transfer services.”

IPART was also proposing nationally consistent ELNO service fees for PEXA, so that subscribers paid the same fees regardless of where they were located in Australia, the regulator said.

PEXA did not immediately respond to a request for comment on the IPART proposal but said on Friday it was disappointed by the move.

“We feel it is reasonable to expect IPART to be far more cautious in making contestable assumptions about an appropriate return on historic investments in a start-up online platform given the significant impact of those assumptions,” PEXA chief executive Russell Cohen said in an investor presentation, according to a transcript of his remarks.

Adjunct associate professor at Griffith Business School, Graeme Hughes, said IPART’s draft plan did not represent a competition shakeup for PEXA, which he described as “the platform running the rails for almost the entire market”.

“It is a quiet admission by the regulator that competition has failed, forcing them to treat PEXA like poles and wires by capping revenue against costs,” Hughes said.

“PEXA will no doubt spend the consultation window fighting the scale and timing of the cut but the structural reality is clear.

“Investors who priced this as an unencumbered high-growth tech asset are being forcefully reminded that they own a heavily regulated utility.”