New competition inquiry into eConveyancing

SENATORS have begun an investigation into eConveyancing to explore “micro-competition opportunities” in the sector.

The announcement comes amid growing calls for reform in eConveyancing – as the single provider PEXA has been hit by multiple outages over the past two months.

The Senate’s Economics References Committee has been asked to report back by September after a motion by Shadow Assistant Minister for Competition, Charities and Treasury Dean Smith.

He claimed competition concerns had been “largely ignored” despite repeated warnings to the ACCC, the National Competition Taskforce and Treasury officials over the past year.

“The Senate inquiry is a welcome opportunity to prosecute this issue with a view to ensuring consumers get the best competition outcome possible — and the Senate recognised that yesterday,” he said.

Disruptions affected the PEXA digital platform during December and January, impacting transactions at the CBA, Bendigo Bank, Bank of Queensland, and Macquarie Bank.

A PEXA spokeswoman said the issues were temporary and have since been resolved.

“Over December and January PEXA worked with our partners to address third-party, and other, technical issues which temporarily affected our customers,” the spokeswoman told Australian Conveyancer magazine.

“These issues have all been resolved and the PEXA Exchange remained operational throughout.”

Ensuring customer satisfaction was the top priority, the digital settlement platform said.

“We endeavour to continue driving innovation on our platform whilst minimising the risk and magnitude of disruption to our customers.”

PEXA became wholly privately owned in 2019 when states sold off their interests in the company. Today, the Commonwealth Bank-banked firm has a near monopoly over Australia’s eConveyancing market.

The industry regulator – the Australian Registrars National Electronic Council (ARNECC) – includes registrars from each state and territory and has been leading the reform to deliver full competition in digital settlements by December 2025.

ARNECC’s reforms have been taking place with the participation of the Electronic Lodgment Network Operators (ELNOs) PEXA and rival company Sympli, as well as the major banks, and other key industry and government stakeholders.

However, the interoperability reform has been knocked by several roadblocks to date.

Progress on the timeline to open up the platform to competitors suffered a further blow when ARNECC announced last June that it had halted its reform program.

In a statement, ARNECC blamed issues raised by the banks for the stalemate, saying they were “beyond the remit of state and territories to resolve”. ARNECC said it would raise these challenges with the federal government and regulators.

At the moment, Sympli – a joint venture between legal software provider ATI Global Limited and ASX Ltd – cannot operate seamlessly within the existing network platform.

However, PEXA has raised concerns with ARNECC that the move to achieve interoperability could compromise its intellectual property, but Sympli accuses PEXA of simply trying to protect its monopoly position.

Last November, the Australian Competition and Consumer Commission revealed it is inquiring into concerns PEXA may be engaging in anti-competitive conduct, including by allegedly delaying the reforms designed to open the e-conveyancing platform to competitors.

ACCC executive general manager of competition, Melinda McDonald, told a Senate committee in November these concerns “warrant further consideration” but added relevant information was still being obtained and it wasn’t an “in-depth investigation at this stage”.

“As each of these issues are raised, we consider them carefully and respond,” an ACCC spokesman said in November.

The ACCC was asked about the current status of these complaints but did not comment.

“The ACCC does not generally comment on complaints received or potential investigations, as per our Media Code of Conduct,” a spokeswoman told Australian Conveyancer magazine.

The ACCC has maintained that ARNECC – as the industry specific regulator – is best placed to consider, assess and address any concerns about the interoperability reform process.

“The ACCC considers that successful completion of the regulatory reform process is the best avenue to achieve the development of a robust market where competition delivers value and innovation to users,” the spokeswoman said.

ARNECC and the Australian Banking Association were both contacted for comment but did not respond by deadline.

Meanwhile, leading conveyancers are demanding more progress on competition reform, complaining conveyancing businesses are coming under pressure from the fees charged by PEXA, especially smaller firms.

Since 2013, PEXA has facilitated more than 16 million property settlements through the PEXA Exchange in Australia, with 90% market reach.

In a study last June, the NSW Productivity and Equality Commission said the current market for eConveyancing is “not effectively competitive, as demonstrated by high levels of market concentration and the incumbent ELNO earning high profits”.

And an Australian Productivity Commission report in November found that greater competition in e-conveyancing could significantly reduce the cost of e-conveyancing services, leading to lower prices of $8 to $15 per transaction.

Note: The Australian Conveyancer is powered by triSearch but maintains editorial independence. triSearch is owned by ATI Global, which also has shares in Sympli.