NSW, Queensland vow to push on for reform
After electronic conveyancing regulator ARNECC paused its decade-long work to facilitate interoperability in the industry and break a property settlement monopoly, two states bodies have vowed to push ahead with the reform.
NSW and QLD will lead eConveyancing competition reform after the regulator announced it was pausing work on the interoperability program.
The state governments made the decision in the week the NSW Productivity and Equality Commission suggested consumers are missing out on $89m of savings annually because of a lack of competition.
In letters sent to industry, the NSW and Queensland governments announced they would tackle the issues behind the decision to halt the program by the regulator, the Australian Registrars National Electronic Council (ARNECC).
They said they would be “jointly and proactively exploring options to resolve the issues facing the Program with a view to recommending the design, build and testing of interoperability functionality as soon as possible.”
Their decision to push ahead comes less than a month after ARNECC said it was pausing the reform project.
The Productivity Commission market study published at the beginning of this month made 18 recommendations to ministers, regulators and those with responsibility for competition in eConveyancing.
“These have a short-term focus on progressing the interoperability reform, and a longer-term focus on developing an effective and appropriately resourced regulatory framework,” the report says.
“The current eConveyancing market is not effectively competitive which is demonstrated by the high levels of market concentration and the incumbent ELNO earning high profits.
“Competition is beneficial to both the eConveyancing market and other related markets, such as the market for mortgages and refinancing.
“Competition results in lower prices, better quality, increased innovation, greater choice of product offerings, and increased prosperity.”
The report goes on to say that “price control arrangements have allowed ELNOs to set prices at levels that do not reflect their underlying costs.
“The arrangements also allow ELNOs to increase prices on an annual basis in line with the CPI with no requirement to improve efficiency or pass on the benefits of cost efficiencies to consumers.
“It is therefore unlikely that consumers have fully benefited from lower costs due to the shift to eConveyancing.
“Rather, the significant productivity benefits— estimated to be $89 million annually (Deloitte Access Economics 2018)—have likely been captured by ELNOs operating in the market to date in the form of above normal profits as well as by conveyancers in the form of time savings from not having to physically travel and attend settlements in person.
“That end-user consumers have not shared in the significant productivity benefits that eConveyancing has produced is unfortunate given eConveyancing services are government-mandated in some jurisdictions.
“A lack of increased consumer welfare arising from a government-sponsored initiative to digitise and improve the efficiency of the conveyancing process is worthy of further consideration.
“Accordingly, 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 services.”
Don’t forget to subscribe to Australian Conveyancer to hear the arguments from PEXA and Sympli.
