A regulatory body’s decision to abandon eConveyancing reforms has come under fire for creating a monopoly in property settlements for one of the nation’s largest banks, according to a leading digital conveyancing firm.
In a bid to determine the future of the eConveyancing industry, the Australian Registrars’ National Electronic Conveyancing Council (ARNECC) submitted a review of interoperability and the impact of different competition models on the property settlement process.
The report recommended that, given the difficulty of securing bank participation, no interoperability reforms be undertaken, due to high uncertainty about whether any changes could deliver significant long-term benefits.
Additionally, the report highlighted substantial costs, time investment, and complexity in implementing a process that enables software systems to communicate with one another.
Following the report, state and territory ministers endorsed the recommendations and scrapped eConveyancing reforms.
According to digital conveyancing firm Lawlab, ARNECC’s decision to abandon the reforms has handed the Commonwealth Bank of Australia (CBA) an unprecedented level of control over the nation’s property settlement market.
Lawlab managing director Ian Perkins said the regulator’s decision to forsake the reforms was a sign it could not fix the industry’s emerging monopoly.
“That leaves Australia’s property market entirely at the mercy of the banks, and the banks have made their position clear,” Perkins said.
With CBA owning a 24 per cent stake in Property Exchange Australia (PEXA), in addition to around a quarter of the nation’s home loan market, Perkins said the bank now had an “unprecedented” level of influence over both the lending pipeline and settlement infrastructure.
“When the biggest lender is also the biggest beneficiary of the monopoly settlement platform, it’s no surprise the banks refuse to accept alternatives. This is a structural conflict of interest, and consumers are the ones paying for it,” he said.
Perkins said that the lack of property settlement options was driven by the banking sector and had left consumers forced to rely on just one service.
“We have a $1 trillion settlement market running through a single operator. If PEXA goes down, the entire country’s property market goes down with it,” Perkins said.
In response to the emerging monopoly, Perkins called for banks to begin accepting other e-settlement platforms and the state and federal governments to address the policy vacuum created by the regulators’ retreat.
“With ARNECC stepping away, the rest of the banking sector must break ranks.”
“Consumers deserve choice, resilience and competition. ARNECC has walked away from reform. The banks are blocking competition – and consumers are paying the price,” Perkins concluded.
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