Chapter 4Interoperability
4.1As discussed briefly in chapter two, interoperability refers to the way in which different Electronic Lodgement Network Operators (ELNOs) would be able to take part in an e-conveyancing transaction. Currently, an e-conveyancing transaction must take place on a single platform, meaning all four parties to the transaction (the buyer, the seller, the buyer’s bank and the seller’s bank) must all use the same e-conveyancing platform, either Sympli or PEXA.
4.2In describing the current lack of interoperability in e-conveyancing, Mr Philip Joyce, CEO of Sympli, drew on telecommunication service providers, describing a lack of interoperability as being like having one phone to call a person on a Telstra network, and needing another phone for Vodafone or Optus.
4.3From evidence received both in submissions and at the public hearing, there was a clear consensus that the main barrier to increased competition in the e-conveyancing market was a lack of interoperability between ELNOs.
4.4This chapter will provide a brief overview of ARNECC’s current Interoperability Program (IOP), the major barriers preventing interoperability, and potential ways to overcome those barriers and alternative models of interoperability.
History of interoperability
4.5Participants in the hearing provided detail about the history of creating an interoperable e-conveyancing system and the delays which have characterised this process.
4.6ARNECC’s work to develop an interoperable e-conveyancing system, called the Interoperability Program (IOP), has been ongoing since 2019. The Terms of Reference for ARNECC’s currently ongoing Cost-benefit Analysis review state:
For more than five years, work has been underway to develop a technical and regulatory regime for ‘interoperability’, the interworking of two ELNs in a way that enables an ENL subscriber to complete a conveyancing transaction with a subscriber who is using a different ELN. The original purpose of the interoperability reform was to support a sustainable competitive market structure for electronic conveyancing.
4.7Evidence provided to the committee showed that the IOP had experienced a number of delays through its history. Table 3.1 below, produced using information in the NSW Productivity and Equality Commission’s eConveyancing Market Study and ARNECC’s Cost-benefit Analysis Terms of Reference, provides a brief overview of the delays and timeline changes for the release of full interoperability:
Table 4.1Timeline of IOP milestones and delays
| |
2019 | A variety of reviews and reports are released discussing interoperability and the need for structural change to the e-conveyancing market. |
2020 | ARNECC undertakes the first Cost-benefit Analysis and provides it to a Ministerial roundtable. Roundtable supports interoperability as part of the Electronic Conveyancing National Law (ECNL). |
First half of 2021 | Ministers support a timeline for the first interoperable transaction to take place at the end of 2021, with broader implementation to take place in 2022. |
Late 2021 | Timeline is extended with the first interoperable transaction to take place in the third quarter of 2022 and full interoperability to take effect by mid-2023. |
Mid 2022 | Timeline is further revised. First interoperable transaction to take place in March 2023 with an agreement to revise the dates for broader implementation. |
February 2023 | First interoperable transaction further delayed to September 2023. |
July 2023 | Interoperability to commence in New South Wales and Queensland from July 2025, with the ELNOs required to complete the build and testing of a technical solution to the barriers to interoperability by 31 December 2025. |
Source: NSW Productivity and Equality Commission, eConveyancing Market Study, June 2024, pp. 22-23; ARNECC, Cost-benefit Analysis Terms of Reference, July 2025, pp. 6–9.
4.8In June 2024, the IOP was paused by ARNECC after a Ministerial Forum held by state and territory ministers found that the IOP could not continue due to issues raised by the banking industry.
Current status of the IOP
4.9Currently, ARNECC is undertaking the following work to inform the future direction of the IOP:
it has commissioned an independent consultant to perform ‘an in-depth review of the functional requirements for interoperability’ (the Functionality Review);
a more updated cost-benefit analysis (the Cost-benefit Analysis) has also been commissioned to determine whether the current model for interoperability is still the most appropriate model for the sector; and
ARNECC is creating a new governance structure in order to oversee the review program of work.
4.10Mr Matthew Kamarul, Chair of ARNECC, commented that while the two current reviews being undertaken were highly important, there was also a clear need for the regulatory framework to be ‘clearly articulated and for gaps to be filled…’. He also acknowledged that timeliness was important, considering the current market dominance of PEXA.
4.11Mrs Susheila Vijendran, Deputy Chair of ARNECC, explained that at the end of the two current reviews ARNECC was hopeful it could make a decision about whether to continue with full interoperability, whether a partially interoperable model (such as the practitioner first model) would be more appropriate as a step towards full interoperability, or whether there are benefits to a monopolised market which would outweigh the benefits of a more competitive market. She explained the two reviews in more detail:
We expect the functional requirements review to provide a very good idea of what changes are required to give effect to interoperability. The outcomes of that functional requirements review will also go to the cost-benefit question, because the cost of implementing will be considered in the analysis. So functional analysis will inform the cost benefit, and the cost-benefit analysis will tell us if there is sufficient benefit to stakeholders in investing in the various models as against each other and as against a monopoly market.
4.12As mentioned in chapter two, evidence provided to the committee was that ARNECC’s two reviews were due to be completed sometime in October 2025.
4.13Mrs Vijendran clarified that the ECNL as it currently stands mandates interoperability between ELNOs in all states and territories. Currently, the only state that has provisions in place enforcing interoperability is New South Wales. Due to the pause in the IOP, all jurisdictions currently issue annual waivers to both ELNOs so that these companies are not in breach of the ECNL and the Model Operating Requirements (MOR).
4.14PEXA provided evidence to the committee that it had ‘cooperated extensively’ with the IOP, met every milestone and attended a high number of meetings and workshops to facilitate this program. Mr Russell Cohen, Chief Executive Officer and Group Managing Director of PEXA, noted that his organisation had spent over $20 million internally on interoperability. The vast majority of this money had been spent on the technical feasibility of the interoperability regime.
4.15Rebutting this, Mr John Ahern, CEO of Infotrack, one of Sympli’s parent companies, remarked that although PEXA claimed to be cooperative with the IOP, the continuing extension of timelines for interoperable transactions suggested this was not the case. He further noted that the most recent obstacle in the IOP process was the withdrawal of the major banks from IOP workshops and the subsequent stalling of the process.
4.16Mr Ahern of Infotrack made the claim that the pause in the IOP was due to a letter written by PEXA in December 2023 to the major banks leading to the banks’ withdrawal from interoperability workshops:
I would argue ARNECC did not pause the program; the actual pause occurred when the banks withdrew from those workshops. ARNECC has limited power. Specifically, it cannot regulate on financial settlements or competition issues. With this gap, both the ACCC and ARNECC have stated that monopolistic behaviours will expand into adjacent services.
4.17Expressing frustration with the delays to the IOP, Ms Ange Nguyen of the Australian Institute of Conveyancers (AIC) gave evidence that there had been multiple timelines for functional interoperability. These timelines had been missed, with ‘no consequences for those timelines being missed’ and consumers being the losing party as further delays occur and no additional choice enters the market. She also expressed scepticism about ARNECC’s ability to bring about interoperability, noting a lack of regulatory tools available to it.
4.18Pushing back on these views, the Australian Banking Association (ABA) provided evidence it had participated fully in the IOP, with its members investing ‘significant time and resources in workshops, industry panels and state inquiries as well as providing ongoing feedback to ARNECC on the functional requirements that must be met in order for the program to succeed’.
4.19At the same time, Mr Christopher Taylor, Chief of Policy at the ABA, explained that the ABA’s support for the IOP was conditional on three factors: that any framework adopted by functionally equivalent to current processes, that interoperability not introduce new risks to the market, and that customer experience not be degraded. He went on to say that these matters had been brought up by the banking industry consistently since the commencement of the IOP and remained unresolved.
4.20Mr Taylor also objected to the description that the banks had ‘withdrawn support’ for the IOP, arguing that the banking industry had been consistent on its requirements since the commencement of the IOP. He went on to say that successful interoperability would require not just a successful lodgement of transfer documents with land titles registries but also successful financial settlement. Mr Taylor took the view that there was a jurisdictional issue at play in this matter, with the states having primary responsibility for land title registration, but ARNECC being concerned it did not have similar jurisdiction over the financial elements of a property conveyance.
4.21In their submission, Mr James Endres and Dr Rob Nicholls provided their views on the pause of the IOP:
ARNECC paused its Interoperability Program in June 2024 in response to concerns raised with ARNECC, and relevant State and Territory Ministers, by the banking industry. These concerns relate primarily to the importance of standardised platform functionality and data standards to avoid banks having to establish duplicative and costly processes to accommodate interoperability of ELNOs. While this concern is not unreasonable, its significance is heightened by the fact that PEXA has not shared details of its platform functionality and data standards with the ARNECC interoperability working group and ARNECC has been reluctant to take the necessary steps to compel PEXA to share such information.
4.22PEXA has stated that the banking industry’s concerns which caused the pause in the IOP were largely based around equivalent functionality between PEXA’s systems and Sympli’s systems.
4.23Mr Chris Taylor of the ABA was supportive of ARNECC’s decision to pause the IOP and commence its current interoperability reviews, the Functionality Review and the Costs-Benefit Analysis, in order to address the concerns raised by the banking industry. He went on to say this was an important opportunity to resolve the issues the banking industry had been raising throughout the IOP.
4.24Mr Craig Evans, Head of Economic Policy at the ABA, was adamant that the ABA’s position was that:
…interoperability must result in an equal or higher service standard to customers than what we’re currently providing, and that interoperability must be the same or functionally equivalent to transactions available today.
4.25Mr Taylor expanded further on the ABA’s support for ARNECC’s two reviews, stating that the Functionality Review was an opportunity for examining alternative models for interoperability, such as the ‘practitioner-first model’ (discussed further in this chapter below), as well as the needs of market participants, such as lawyers, conveyancers and banks, in a functioning e-conveyancing system. He was also supportive of the broader remit of the current Costs-benefits Analysis, noting that the previous costs-benefit analysis done by ARNECC had mainly focused on the cost to customers (that is, conveyancers and lawyers who would then pass those costs on to their clients), whereas the current review would look more holistically at the costs of interoperability in the e-conveyancing system.
4.26Other witnesses at the public hearing were also supportive of the Functionality Review and the Costs-benefit Analysis. For example, Mr James Endres noted that the Costs-benefit Analysis would be examining matters which had not been considered in the 2018 version of the review such as alternative models of interoperability, but urged ARNECC to act quickly to complete the review.
4.27All the major banks which appeared before the committee at a public hearing expressed support for the interoperability process and competition in the e-conveyancing market. They also commented they had taken part in the IOP and worked with government and stakeholders throughout the process. However, each of the banks also commented that interoperability should not come at the expense of the standard of service provided to their customers or increase the risk of failed settlements.
4.28Mr Neil Witkowski, Chief Operating and Legal Officer at Titles Queensland, gave evidence about a review that Queensland and New South Wales had undertaken into interoperability. This review had found that any program to move towards interoperability in the future would need to look very different from the previous IOP and would need have the right expertise and resources in place in order to make it successful.
4.29Mr Philip Joyce, CEO of Sympli, emphasised that Sympli would continue to cooperate with ARNECC’s reviews, as it had it had in the past. He was confident that the outcomes of the current reviews would mirror previous reviews completed by ARNECC, the ACCC and the NSW Productivity Commission that had concluded that interoperability was the best way to introduce competition into e-conveyancing.
4.30Mr Endres and Dr Nicholls expressed more caution in relation to the two ARNECC reviews, suggesting these reviews would ‘replicate previous technical and economic analysis already conducted,’ which would likely result in a continuation of the current situation. They told the committee that in order to avoid this, ARNECC should develop, in consultation with the ACCC and other relevant federal government stakeholders, an industry roadmap with milestones for achieving interoperability. This roadmap would be published with quarterly updates indicating whether milestones had been met.
4.31Further discussion about the more specific matters preventing interoperability, such as PEXA’s claims of intellectual property infringement and concerns about the increasing complexity of the IOP, will be discussed later in this chapter.
The case for interoperability
4.32Despite the delays in the process towards an interoperable e-conveyancing market, a large number of participants in the inquiry outlined the importance of interoperability as part of the move towards competition in e-conveyancing.
4.33Many of the matters relating to the benefits of interoperability in the e-conveyancing market, such as better user outcomes and reduced single point of failure risk, are discussed in more detail in chapter three of this report. As they relate specifically to interoperability, there will be briefly discussed below.
4.34Mr Joyce of Sympli explained that there would be multiple benefits provided by interoperability. Aside from downward pressures on prices, there would also be benefits in the form of a more resilient market, given that PEXA, as a sole provider, represents a single-point-of-failure risk.
4.35Mr Joyce also contended that if his company, Sympli, exited the market, it was unlikely another company would attempt to enter the e-conveyancing market due to the high barriers to entry. In this scenario, PEXA would have a continuing and even more entrenched monopoly. He added:
…we've invested approximately $160 million into our platform. Our intent, very much as you'd have seen in our submission, is to offer—and we have—a viable national network with the features that customers want. But we are blocked from getting to the market because we don't have the standard to allow networks to talk to each other.
4.36The AIC was in favour of mandating interoperability. At the public hearing, its representatives emphasised the need for ‘an e-conveyancing system that is fair, strong and focused on people, not big players’. Any reforms, the AIC argued, should be centred on ‘innovation, infrastructure renewal and consumer protections’.
4.37Ms Angie Nguyen of the AIC gave evidence that the introduction of e-conveyancing in the legal sector was sold with the promise that conveyancing would be cheaper for the consumer. However, the experience of conveyancers, Ms Nguyen told the committee, had been that e-conveyancing had added fees for their clients. She added that in the short term, increased competition brought about by interoperability would probably not decrease costs for consumers, but in the long term the decreased costs brought about by e-conveyancing would lead to reduced costs and more efficiencies for the market.
4.38Other conveyancers and legal practitioners who made submissions to the inquiry, while not specifically mentioning interoperability, were strongly in favour of increasing competition in e-conveyancing, noting a lack of competition on fees, services, and a lack of choice for industry. This view was also expressed by the Law Council of Australia, which was supportive of ARNECC’s two ongoing reviews into interoperability and noted that interoperability was ‘long overdue.’
4.39Mr James Endres, appearing in a private capacity, described the e-conveyancing industry as having evidence of market failure, pointing to the findings of the ACCC and the NSW Productivity and Equality Commission, which had raised similar concerns. He argued that e-conveyancing was not a natural monopoly and the lack of interoperability was hampering competition in the market. Mr Endres emphasised that time was of the essence in this situation, noting that another potential competitor to PEXA, Lextech, had recently left the market.
4.40Dr Rob Nicholls, also appearing in a private capacity, echoed these views, describing PEXA’s market dominance as regulatory failure rather than a natural monopoly. He drew the committee’s attention to his and Mr Endres’ submission, which provided a cost benefit analysis that showed interoperability providing a $3 benefit for every dollar spent.
4.41Dr Nicholls provided examples of other industries where interoperability and associated regulation had created more competitive markets. This included the telecommunications industry, electricity markets, and banking after the introduction of the Consumer Data Right.
4.42Some submissions to the inquiry, while being in favour of interoperability and increased competition in the e-conveyancing sector, noted the fact that PEXA had a ‘first mover advantage’ in the market. Later entrants, as Mr Michael Kenny submitted, should, ‘as Ralph Waldo Emerson said…develop a better mousetrap and then the world will surely beat a path to their door’.
4.43Other participants in the inquiry were more measured about the benefits of interoperability. Mrs Susheila Vijendranm, Deputy Chair of ARNECC, stated that previous analyses had shown the cost benefits of interoperability would be less than $10 per transaction. She added that the Cost Benefit Analysis currently being undertaken by ARNECC was likely to provide a better and more current insight into how much of a benefit would be provided by an interoperable market, as well as analysing other forms of competition was well.
4.44Mrs Vijendranm did point out to the committee, however, that there would be other benefits to an interoperable e-conveyancing market beyond reduced costs. These benefits could include greater innovation leading to faster and more efficient settlements, we well as overall productivity benefits. Mrs Vijendranm also emphasised that whether e-conveyancing remained a monopoly, or evolved into a duopoly or more open market, there would still be a need for strong regulation of the market.
4.45Other witnesses to the committee argued that another benefit of interoperability would be improved resilience of the e-conveyancing system, through multiple ELNOs having fully interoperable systems. This would, witnesses argued, create competitive pressure which would bring about more secure and resilient systems.
4.46This view was echoed in evidence provided by Sympli, which explained that Sympli was ‘a full national network with its own infrastructure and connections to land registries, revenue offices, the RBA and the major banks…’. Once the interoperability program was complete, would be able to provide an alternative platform to PEXA in case of outages.
4.47Other witnesses were less certain about the possibilities of interoperability. Mr Chrisopher Taylor of the ABA was of the view that increasing competition on its own was a reason for moving to interoperability. He was firm that a move to interoperability should be an outcome of considered reviews, such as the Functionality Review and the Cost Benefit Analysis currently being conducted by ARNECC. He also noted that there were alternative models which could be considered for the e-conveyancing sector, such as increasing price controls and regulation which would drive innovation.
Barriers to interoperability
4.48Previously, this chapter had discussed the pause of the IOP and the events leading up to this. Following on from this discussion, the committee also received evidence about the barriers to that program re-commencing.
4.49Participants in the inquiry gave several reasons for why the IOP had been paused and what was preventing interoperability in e-conveyancing. These include claims of mission creep of the IOP, technical and regulatory barriers to interoperability, and claims made by PEXA that full interoperability would infringe on its intellectual property.
4.50Regulatory barriers to competition in e-conveyancing are discussed in more detail in chapter three of this report, but there is some brief discussion of these barriers as they relate specifically to interoperability and the IOP below.
Mission creep and increasing complexity
4.51PEXA told the committee was the IOP had suffered from ‘mission creep’ over the course of the program’s lifetime. Mr Russell Cohen of PEXA explained that, at commencement, the IOP had been focused on interoperability at the lodgement stage of a property transaction (that is, interoperability between platforms occurring only for the transfer and lodgement of the title transfer documents to the relevant state or territory’s titles registry) but had grown to include the financial settlement aspect of a property transaction as well (that is, the transfer of funds between a buyer and seller’s banks through the RBA).
4.52Ms Kate Camilleri, General Manager, Industry and Strategy Delivery at PEXA, explained that this mission creep had commenced in 2023 after two pilot transactions took place with two of the major banks. The banks involved in those transactions took the view that there would need to be functional equivalence between PEXA and Sympli’s products in order for interoperable transactions to occur at scale. At that time, PEXA pointed out that some of the workflows for its integration with the banks were its intellectual property. (PEXA’s intellectual property claims, and the relationship of those claims to interoperability, are discussed further below.)
4.53Mr Russell Cohen, CEO and Group Manager at PEXA, contended that while the IOP was well-intentioned program, ‘there was never really a clear business case around interoperability,’ and the complexity and length of time needed in order to make interoperability happen was ‘grossly underestimated’ and ‘largely unrealistic’.
4.54Sympli disputed this explanation, with its CEO, Mr Philip Joyce, explaining that interoperability was a matter of exchanging data between parties so that a transaction could go ahead, similar to the payments system. He rejected the claims made by PEXA that the IOP had been subject to mission creep and stated unequivocally that ‘what we are seeing is the monopoly really acting in their interest’. Mr Joyce maintained that the IOP had, from its inception, included financial settlement.
4.55Mr Joyce also reiterated his claims that the reasons for the pause in ARNECC’s IOP was PEXA’s letter to the major banks making intellectual property claims (discussed further below). While making the point that he believed that PEXA’s intellectual property claims were unsubstantiated, Mr Joyce remarked that ARNECC had no regulatory power over the banking system to compel them to take part in the IOP after the banks withdrew from the program.
4.56MrKamarul, Chair of ARNECC, did make similar statements about the members of ARNECC having expertise and regulatory authority over the lodgement part of a property transaction but lacking similar experience over the financial lodgement side of those transactions. He made the point that the financial aspects of a property conveyance were governed by a variety of Commonwealth regulators, including ASIC and the RBA, going on to say:
There is currently no single regulator with [a] clear remit to oversee an end-to-end e-conveyancing transaction and clear authority to effectively regulate all participants in the e-conveyancing ecosystem. Similarly, if regulation of the end-to-end e-conveyancing transaction rests with several regulators, their roles and remit are not clearly defined, as there's been no overall analysis to ensure that all activities within e-conveyancing that need to be regulated are regulated and, if so, by whom.
4.57When asked about the events which led to the pause of the IOP, Mrs Vijendran of ARNECC stated that the program had become increasingly complex. She did note that correspondence from PEXA to the major banks was ‘a turning point,’ after which the ABA had written to ARNECC expressing serious concerns about the IOP.
4.58Mrs Vijendran went on to say that ARNECC recognised that change for the banking industry takes a significant amount of time and resources, and often presents increased risks. She also noted that the banks being required to integrate with a second ELNO would require a large amount of change to their systems, as well as significant capital investment.
4.59InfoTrack’s evidence before the committee acknowledged the complexities of achieving interoperability but denied there were technical barriers preventing this. Mr John Ahern of InfoTrack argued that PEXA, the banks and other stakeholders needed to see interoperability as critical, come together and deliver the program. Mr Ahern further noted that the designs for interoperability were finalised in either 2021 or 2022, with workshops since that time being more focused on ‘specific implementation approaches’.
Intellectual property concerns
4.60A large amount of evidence was received by the committee about claims that PEXA would have to provide its competitors (primarily Sympli) with access to its systems, which are made up its intellectual property, and whether those intellectual property claims were legitimate.
4.61Mr Russell Cohen, CEO and Group Manager of PEXA, explained PEXA’s objection to sharing the information it had claimed as intellectual property:
All the financial integrations with the banks that PEXA has built over many years are, we believe, PEXA's intellectual property. Sympli has its own integration with banks. But the banks had said, 'We'd like each customer that's settling a property to have an equivalent experience, regardless of which ELNO.' That's where PEXA had felt that they would need to share intellectual property to make that available. That's the objection we have.
4.62Mr Cohen went on to say that the interfaces, software and code in question had been built over a number of years and were required to successfully settle and lodge a property transaction, but was not within the ‘regulatory domain’. He also underlined that PEXA’s shareholders had paid a significant amount for this software during the time of its initial private offering.
4.63On further questioning, Ms Clare Gill, Chief Regulatory and Corporate Affairs Officer at PEXA, confirmed that PEXA did not have any patents over the software and systems over which it was claiming intellectual property rights. She went on to say that there were other ways to value innovation, and it was not necessary to have a patent for a piece of technology to be ‘protected and recognised as innovative’.
4.64Mr Cohen of PEXA explained further that interoperability, as conceived by the IOP, was more complex than two equivalent ELNOs communicating with each other for a transaction. The IOP was designed around a ‘responsible ELNO’ and a ‘participating ELNO’, with the participating ELNO being reliant on the functions and features of the responsible ELNO. He added:
The situation we have in Australia right now is that we don't have a set of equivalent pieces of infrastructure with the same product definitions or the same geographic scope. It has made the two networks dependent upon each other and one reliant on the other. Hence, that is the intellectual property that we believe is being encroached upon in the design as contemplated.
4.65Asked to specify which of its pieces of technology it would like to protect, Mr Cohen of PEXA singled out PEXA Key, a secure data app which allows for the safe transfer of banking details between a customer and their lawyer or conveyancer. Mr Cohen further noted that secure data apps were a competitive marketplace.
4.66Mr Philip Joyce, CEO of Sympli, strongly disagreed with this view, making the point that Sympli had never received an intellectual property claim from PEXA. He contended that the features PEXA had provided the committee with information about were not only not unique, with Sympli’s platform providing similar services, but also predated digitisation and were fundamental to the conveyancing industry. Mr Joyce argued that interoperability would not require the disclosure of intellectual property, telling the committee that Sympli’s views were backed by legal experts and ARNECC. He was confident that the current reviews being undertaken by ARNECC would confirm this view.
4.67When questioned about PEXA’s intellectual property claims and its impact on the IOP, Mr Christopher Taylor of the ABA conveyed that his organisation was not able to assess the validity of PEXA’s intellectual property claims and made the point that the matter was currently being considered as part of ARNECC’s Functionality Review.
4.68Mrs Vijendran of ARNECC confirmed that, after significant negotiation, the material over which PEXA was claiming intellectual property rights had been delivered to ARNECC’s project teams, so good progress was being made on the Functionality Review. She went on to say:
…ARNECC understands that PEXA's a commercial entity and has its own obligations to its shareholders, but we also consider them to be a highly regulated entity that requires a social license to operate and provide services to the Australian community, so we, as regulators, would expect them to be forthcoming in that regard.
4.69As mentioned in previous chapters, New South Wales is currently the only jurisdiction with enforcement provisions against an ELNO for not being interoperable. When questioned about why it had not taken action against PEXA for not complying with interoperability, Ms Danusia Cameron, the Registrar General of the NSW Office of the Registrar General, commented that her office had considered taking action against PEXA after the issues around intellectual property claims came to light. She described PEXA’s intellectual property claims as ‘pretty thin’ and unsubstantiated. However, the Office of the Registrar General had not taken action as it would not address the main issues, which she identified as oversight of the major banks and structural imbalance.
4.70Ms Cameron further stated that the NSW Office of the Registrar-General had asked PEXA to substantiate its intellectual property claims, but PEXA did not do this in detail. Going further, she said that intellectual property claims were not an insurmountable barrier to interoperability, and that ARNECC’s Functionality Review was currently going into detail with the banks and PEXA in order to address PEXA’s intellectual property concerns.
Solutions
4.71Inquiry participants also discussed possible solutions to the current impasse in relation to interoperability, such as federal intervention, an expanded role for ARNECC and alternatives to the current interoperability model being pursued.
4.72The AIC recommended that the Commonwealth government mandate interoperability in alignment with ARNECC’s national roadmap and provide funding and technical support for the delivery of interoperable e-conveyancing.
4.73One suggestion offered by Mr Richard Bootle, Director of lawlab Pty Ltd, was that federal funding be allocated to support the states and territories in the delivery of interoperability between ELNOs, with a condition of those funds being achievement of interoperability. Mr Bootle also suggested that ASIC and APRA could be directed to work with the banking industry on managing resilience risks for e-conveyancing, so that interoperability or an acceptable alternative is achieved. His final suggestion was that the government direct the ACCC to examine PEXA’s market conduct and the impacts of that conduct on competition.
4.74Dr Rob Nicholls was also in favour of the ACCC having a role here, suggesting that the relevant Minister’s next letter of expectations to the regulator could include specific directions to consider the e-conveyancing market. He said that this could be broadened to include APRA, ASIC and AUSTRAC, and made the point that any regulatory decision or statement from the ACCC or another regulator in this space would have a significant impact on the sector.
4.75Mr James Endres took a similar view, and explained that ARNECC was not set up with a clear mandate to drive the technical and competition issues which had come up through the interoperability process. Any organisation which took on this challenge, Mr Endres told the committee, would need to be appropriately resourced and have enforcement powers to ensure cooperation from stakeholders. Mr Endres was in favour of existing regulatory agencies such as the ACCC and the RBA having a clear role and mandate in this space.
4.76Mr Matthew Kamarul, Chair of ARNECC, made the point that it was important for the committee to consider which was the right regulator for the e-conveyancing sector, as well as reviewing the regulation of participants in the e-conveyancing process:
If pro-competition reforms need cooperation from participants such as financial institutions, conveyancers and lawyers, the involvement of other regulatory bodies, including competition and financial regulators, should be considered to achieve that co-operation. The committee should also consider what is the best model for competition oversight of ELNOs to facilitate competition through the entire e-conveyancing ecosystem. Thought needs to be given to how much regulation can be achieved through the cooperation of multiple regulators.
4.77Matters relating to regulation and regulatory gaps relating to e-conveyancing are discussed in more detail in chapter four of this report.
Alternative models of interoperability
4.78The committee also heard evidence about the possibility of trying different models of interoperability to bring more competition into the e-conveyancing sector.
4.79PEXA provided evidence at the hearing that its ideal form of an interoperable system would be two ELNOs offering their own versions of the same product, with comparable or better functionality, rather than a network that was ‘fusing their network to PEXA’.
Practitioner first model
4.80One of the alternatives models discussed through the hearing was the ‘practitioner first model.’
4.81Mr Joyce, CEO of Sympli, explained the practitioner first model:
…if two banks and two conveyancers were supporting a house sale today, they would all have to be on one network. A practitioner-first release means one or both of the practitioners would be entering their details on the Sympli browser, that information would be passed into the PEXA network and the banks would remain on PEXA. It's that simple. To counterpoint it to today, where a conveyancer would log on to PEXA to enter their details, tomorrow, they would have the choice: do I log on to PEXA, or do I log on to Sympli?
4.82Mr Joyce went on to explain that the practitioner first model addressed the issues raised by the banking industry and PEXA about the need for equivalent ELNO functionality at the settlement stage of a transaction, while also providing choice and competition to the legal community. He also stated that this model would offer increased resilience to the market.
4.83Sympli also noted that using this kind of model would enable conveyancers and lawyers to access Sympli’s cheaper pricing. Mr Joyce asserted that if Sympli’s pricing was applied across the market, there would be a market-wide saving of $23 million, and a $30 saving per house purchase transaction for the parties to the conveyance, compared to PEXAs current prices.
4.84Mr John Ahern of InfoTrack echoed these views but did note that the practitioner first model, while a step forward, would be a concession on Sympli’s part and would reduce its market size.
4.85Ms Clare Gil of PEXA confirmed that PEXA was investigating the practitioner first model at this time, as well as other measures proposed through ARNECC’s current Cost-benefit Analysis.
4.86Mr Cohen, CEO and Group Manager of PEXA, described the practitioner first model as similar to connections PEXA has with other legal software providers. His understanding of this model was that it was in its early stages of development, and his concern would be that this model could seek to entrench itself over other legal practice software which PEXA currently has agreements with.
4.87The committee’s views on the matters raised in this chapter, as well as recommendations, are discussed in chapter five of this report.