eConveyancing must be regulated by Fed and states, Senate inquiry told

REGULATORS overseeing competition in the $330 million eConveyancing market need more resources and tougher enforcement powers.

That was the consensus as the industry came under the political spotlight at the Economics References Committee hearings in Melbourne this week.

Most witnesses stressed the need for greater power for eConveyancing regulator ARNECC (Australian Registrars’ National Electronic Conveyancing Council).

Senators heard from the chief executives of competitors PEXA and Sympli, bankers, the Australian Institute of Conveyancers, regulators and industry experts.

At the heart of the hearing was the viability of the interoperability concept and claims that the States-government founded PEXA platform was a monopoly.

CEO Russell Cohen insisted PEXA was always open to interoperability – the system where multiple eConveyancing platforms coexist on the same digital network.

But he concluded that the complexity of interoperability regime had evolved to a point where “we don’t think it’s fit for purpose.”

“The reality is that there was never a clear business case for interoperability,” he added, noting that cost benefits don’t exist.

Cohen did concede that ARNECC needed to be better resourced, speaking during the first session of the hearing on Tuesday.

It was a sentiment repeated throughout the day by the majority of more than 25 speakers giving evidence.

Both Sympli’s CEO Philip Joyce and InfoTrack’s CEO John Ahern said the regulator “lacked teeth”.

Their views were echoed by the Australian Institute of Conveyancers national council which was represented at the hearing by AIC VIC President Shakila MacLean, Tania Gooley and Angie Nguyen.

Speaking on behalf of the 2,000 conveyancers they represent, Ms Nguyen said the Federal government must play a role in funding interoperability with the Australian Competition & Consumer Commission “empowered to enforce to enforce transparency.”

She also said that the committee should “mandate interoperability,” adding that ARNECC needed the backing and expertise of the ACCC.

LawLab founder Richard Bootle was another independent practitioner who said that ACCC needed to examine interoperability and PEXA.

Economist James Enders told the hearing: “ARNECC’s inability to deliver interoperability over the last five years is a reflection of the fact that it was not established nor properly resourced to oversee the development of interoperability and the associated technical standards needed to drive improved competition outcomes.”

Dr Rob Nicholls, who has served as independent chair on groups examining eConveyancing interoperability under the NSW Registrar General, along with the banks conveyancers, State Revenue, the RBA, and the ACCC, was another giving evidence.

He said: “Without interoperability competition is impossible. PEXA’s 90 per cent market dominance isn’t a natural monopoly.

“It’s a regulatory failure. It’s institutionalised monopoly pricing reflected in 56 per cent EBITDA margins.

“It also means barriers blocking viable competitors like Sympli and LexTech.”

Giving evidence on behalf of ARNECC, Deputy Chair Susheila Vijendran revealed there were currently three reviews into interoperability, including a cost benefit analysis that will be out in October.

Another is examining how there could be an uplift in ARNECC’s regulatory powers.

However, Vijendran was another who acknowledged Federal regulators should be involved in the implementation of interoperability.

NSW Registrar General Danusia Cameron also said that there was a “need for greater Commonwealth involvement” because of the resourcing challenges faced by ARNECC which operates on a budget of $5 million a year.

Speaking for the ACCC, Matthew Schroder said the national consumer regulator had been involved in interoperability for a decade, but only in an advisory role.

He also backed calls for a tougher ARNECC which needs “the resources and the credible threat of enforcement action.”