Senate to probe $800bn e-conveyancing market over PEXA competition concerns

A Senate inquiry will investigate concerns ASX-listed and CBA-backed PEXA has too much control of the $800bn property settlement sector.

The Senate has backed an inquiry into Australia’s e-conveyancing sector over competition concerns. Picture: Brook Mitchell/Getty

A Senate inquiry will investigate competition concerns in Australia’s e-conveyancing market, amid growing calls for reform in a sector where a single provider, PEXA, handles more than $800bn in property settlements each year.

Governments have been pushing to open the market by requiring PEXA to integrate its systems with competitors such as Sympli, which is jointly-owned by the ASX and InfoTrack. However, the process has faced repeated delays and disputes between various regulatory bodies, as well as state and federal ministers.

In November, the Australian Competition and Consumer Commission (ACCC) criticised the privatisation of several state-run property settlement exchanges into PEXA, with chair Gina Cass-Gottlieb telling a parliamentary inquiry it had been done “without a sufficiently clear and certain regulatory framework.”

The Senate inquiry passed with bipartisan support from the major political parties in a vote this week. Shadow Assistant Minister for Competition, Charities and Treasury Dean Smith said 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.

Senator Dean Smith says the inquiry will ensure Australians have access to the best competition outcome possible.

“Assistant Minister Andrew Leigh and the Albanese Government have left many competition reform initiatives to languish. E-conveyancing is a powerful case study of the Government’s lack of interest in the full range of competition issues facing the economy.”

The inquiry will begin in the coming weeks and is expected to report back in September — after the latest possible date for a federal election to be called.

Major players in the e-conveyancing sector, along with banks, may be called to appear before the Economics References Committee.

The e-conveyancing sector is regulated by the Australian Registrars’ National Electronic Conveyancing Council (ARNECC), which represents the registrars-general of each state and territory.

Around 3.7 million e-conveyancing transactions were processed nationally in the year to June 2023. Fees in a four-party transaction were about $380 with PEXA, while its smaller competitor Sympli, which has almost no market share, charged $315 on average.

PEXA, which has an 88 per cent market share, is the only platform which can lodge documents with land registries and complete financial settlements. It was previously owned by the state governments of NSW, Victoria, Queensland, and Western Australia before its privatisation, with Commonwealth Bank now among its major shareholders.

The company has blamed delays in introducing competition on a failure by governments to fully grasp the complexity of its systems, which have suffered a number of outages in the past month, while its main rival, Sympli, has accused PEXA of stalling the process.

A PEXA spokesman told The Australian the company engages constructively with all levels of government and will actively participate in any process seeking to maximise benefits for Australian homebuyers and property owners.

“PEXA will actively participate in any inquiry that genuinely explores the best options to deliver the maximum benefits for Australian home and property owners, including through the various models of competition in e-conveyancing.”

PEXA’s exchange platform had an operating earnings before interest, taxes, depreciation, and amortisation margin of 54.5 per cent.

Sympli, which stands to gain the most from a forced opening of PEXA’s systems, welcomed the Senate’s decision. Sympli chief executive Philip Joyce said an open market would bring tens of million of dollars of cost and efficiency benefits for consumers and small business.

“Federal oversight here will strengthen the scrutiny on the incumbent and provide support for the execution of competition reform at a state level,” he said.

“It is in the national interest that there is competition in this market, where a single provider settles more than $800bn in property each year and customers have no genuine choice.

“Competition will not only benefit consumers and small businesses with lower fees, but build resiliency in a critical part of the Australian economy where there is a clear single point of failure.”

Sympli, led by chief executive Philip Joyce, has the most gain from an open market. Picture: Supplied

The Senate inquiry will examine competition issues in e-conveyancing, with industry stakeholders expected to participate in hearings over the coming months.

Federal Assistant Competition Minister Andrew Leigh has previously criticised states and territories for delays in introducing greater competition into the sector, stating the federal government would only intervene once ARNECC had exhausted its regulatory powers.

“Ultimately this has arisen because states and territories made an ill-considered decision to privatise a public monopoly, which is now behaving as our economics textbooks would lead us to expect,” he told The Australian last year.

“The first step is for ARNECC to ensure that it uses all available powers. At the moment the states and territories haven’t used all their available powers, and so the Commonwealth is ready to step in when the states and territories have run out their powers.”

A deadline of December 2025 has been set for PEXA to allow rival platforms to integrate with its systems. The NSW Productivity Commissioner has recommended penalties be imposed if PEXA fails to meet this target.

Originally published as Senate to probe $800bn e-conveyancing market over PEXA competition concerns