What next for competition in e-Conveyancing?

LEXTECH has announced that it is pulling out of the race to compete with PEXA in the $300 million e-Conveyancing market.

CEO Peter Maloney said the model for a second provider “simply does not stack up” adding that there was no real appetite among lenders or conveyancers for another operator in the market.

Maloney says PEXA should be treated as “critical digital infrastructure” and regulated properly as a monopoly.

That leaves Sympli as the only remaining challenger to PEXA in the $300 million settlement market.

Sympli CEO Philip Joyce said Lextech’s exit was further evidence of PEXA’s dominance and the need for urgent reform.

“If Lextech chooses to exit this market, it is another sad indictment of the power of the entrenched monopoly and the need for urgent government action,” he said.

“Sufficient funding to build a platform is no longer the key issue.

“Government intervention was required to introduce PEXA.

“It’s once again required to deliver competition.”

He added that interoperability had been supported by experts, such as the NSW Productivity Commissioner and legislated by Government as the only way to deliver true competition to tens of thousands of legal and conveyancing practitioners across Australia.

 “Without competition, a monopoly will be permanently entrenched in the market, meaning zero choice for practitioners and a $800 billion single point of failure,” he added.

Joyce said regulators must now give a clear compliance answer on how interoperability will proceed.

The answer to that could come from an inquiry launched by the Senate into e-Conveyancing competition.

The launch of that inquiry in February – and due to be heard in September – came after repeated PEXA outages and growing concern about the lack of options in the market.

Shadow Assistant Minister Dean Smith said the inquiry was a chance to properly examine the issue.

“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.

Maloney says consumers don’t care about saving $15 on a transaction when buying a $1 million property.

“At almost $1 million, a consumer isn’t concerned if they save $15 on what is already a very small fee to get their property and keys in their hand,” he said.

He said monopolies can work in Australia when they are properly regulated.

Lextech’s decision follows years of delays and setbacks in the push for interoperability.

That process was meant to allow platforms like PEXA and Sympli to work together so users could choose between them. But Maloney said the systems still can’t connect.

“The PEXA platform doesn’t talk to Sympli’s platform to enable a property transaction to occur,” he said.

“We’re years away from it still.”

In June last year, regulator ARNECC paused its interoperability reforms after banks raised concerns.

The Australian Banking Association later told a Senate committee the current program would increase risk and should be overhauled.

“In our view, the current state of the interoperability program may create a poorer experience and increase the financial risks to [operator] subscribers and consumers,” it said.

“Now is the time for ARNECC to consider alternative models.”

Maloney agreed, saying PEXA should remain the core platform and others should build services on top.

“We should be exploring the infrastructure model where there is an [operator], which is PEXA,” he said.

“It is the backbone for electronic conveyancing and third-party firms are free to build value on top of that platform.”

Along with the Senate inquiry, the ACCC is also reviewing concerns PEXA may be using its position to block reforms.

It said last November the issues “warrant further consideration” but that it was not conducting a full investigation yet.