Watchdog eyes electronic property transfer system over monopoly fears

The competition watchdog has fired a shot at Australia’s emerging electronic property e-transfer system, warning it is being investigated for monopolistic practices.

The watchdog’s probe may unravel the country’s decades-long quest for digital conveyancing to become the norm across the property sector, which settles $300 billion of transactions annually.

The two largest east coast states are set to make e-conveyancing compulsory for all property title and mortgage transfers - shredding 150 years of paper title history from this October in Victoria and next year in NSW.

ACCC chairman Rod Sims is concerned about a monopoly in e-conveyancing.Credit: AAP

But the Australian Competition and Consumer Commission is shining a spotlight on the new e-conveyancing system which is controlled by a private monopoly player, Property Exchange Australia (PEXA).

“We are investigating whether we can take action. We are investigating whether there could be a potential breach of our act,” ACCC head Rod Sims said.

PEXA, owned by major banks, state governments, private equity and property developer Paul Little, is exploring a billion-dollar listing on the Australian stock exchange by the end of this year.

The ACCC’s probe could scuttle those plans.

“What we don’t want is people trying to sell it as a monopoly; that would be very damaging for consumers,” Mr Sims said.

A key concern for the watchdog is the timing of the October changeover in Victoria, which will mandate PEXA as a monopoly.

Another is PEXA’s ownership of the “data standards” used to swap information with state land registries, a major hindrance to competition.

Each state’s Land Registry Office is the ultimate arbiter of property title ownership.

“I really think careful consideration has got to be given to the timing of this, so that we aren’t in a situation where only one player can compete,” Mr Sims said.

Victorian Planning Minister Richard Wynne said the "timing for transfer to e-conveyancing has been known for over two years and there’s nothing to prevent other players entering the market".

Mr Wynne did not answer questions about a monopoly being detrimental to consumers.

The Age and Sydney Morning Herald revealed two weeks ago the government authority overseeing the Australia-wide e-conveyancing transformation, Australian Registrars National Electronic Conveyancing Council (ARNECC), did not control the crucial data set.

“[The council] is working with PEXA to clarify ownership of the data standards,” its chair, Jean Villani, said at the time.

But Mr Sims said: “It really would be highly inappropriate for the market to open up and only one player is ready to go because they had the ability to develop the standards.

“Consumers will lose, let’s be clear.”

Two weeks ago, PEXA boss Marcus Price told The Age and Sydney Morning Herald the group had shared the most recent version of its data standards with aspiring competitor and new market entrant Sympli.

Mr Price said on Friday that PEXA had a "constructive and co-operative dialogue with the ACCC".

Sympli, a joint venture between the ASX and property data provider Infotrack, is hoping to launch a rival platform by the end of the year.

But its chief, David Wills, said a printout of the standards was shared on the “strict condition” it not be used to build a new electronic lodgement system.

The ACCC has powers under the Competition and Consumer Act 2010 to facilitate third party access to significant infrastructure, known as the national access regime.

Accusations of a monopoly are not PEXA's only problem.

It scrambled to upgrade security standards after a breach of its system in June enabled fraudsters to steal $250,000 from the home sale of MasterChef finalist Dani Venn.

Property developers are also alarmed that deficiencies in the system mean it cannot efficiently handle the bulk property settlements needed to distribute ownership of large apartment projects.