Claims buyers pay too much for property transactions under $800b monopoly

The competition watchdog is pushing back on calls for it to rein in Australia’s $800 billion electronic property settlements monopoly amid claims homeowners are paying too much for property transactions and mortgage refinancing.

There are also concerns that Commonwealth Bank-backed PEXA, which is Australia’s only econveyancing services operator, will use the valuable data it collects to dominate downstream services in a manner rivals have compared to Facebook and Google.

PEXA, with more than 88 per cent of the market, has a virtual monopoly on settling property transactions and mortgages in Australia. Credit: Peter Rae

PEXA is an ASX-listed digital platform that enables electronic transfer of property titles and registration of mortgages and other information on the title deeds. It now controls 88 per cent of property transfers in Australia and it holds data on 99 per cent of mortgages refinanced - which the Australian Competition and Consumer Commission said would happen when the state governments moved conveyancing from paper to online.

Last week, a NSW Productivity Commission report said that most of the $89 million in annual productivity benefits generated from Australia’s paper-based conveyancing system going electronic has been captured by PEXA making “above normal profits”.

The ACCC has responded to recommendations from the NSW Productivity Commission report for it to take over the regulation of property settlements, and to conduct a review of what homeowners are charged for conveyancing services, saying this is a matter for the sector’s regulator, The Australian Registrars’ National Electronic Conveyancing Council (ARNECC).

“The implementation and progress of those reforms is a matter for ARNECC and state and territory governments. The ACCC has no specific role under this framework,” a spokeswoman said.

“Any change to the existing regulation of PEXA is a matter for governments.”

The ACCC said it strongly supported efforts to introduce effective competition into the eConveyancing market as soon as is practicable and it noted the effects of “uncertainty and further delay on the development of a competitive market”.

The latter refers to recent news from ARNECC indicating it might have to abandon plans to introduce competition by the end of next year after state government ministers said some of the intended reforms needed federal intervention.

Federal Assistant Minister for Competition Andrew Leigh has responded saying the states have the power to legislate a timetable for reform that will introduce competition and back it with penalties if deadlines are not met.

PEXA itself said it disagreed with many of the NSW productivity commissioner’s concerns about competition.

Sympli chief executive Philip Joyce says the start-up has an advantage in taking on PEXA with better technology and a platform more attuned to user needs. Credit:

“PEXA’s prices are capped and regulated by ARNECC, and PEXA offers consistent pricing for all users across transaction types. This uniform pricing has been crucial for the development of e-conveyancing in both small and large jurisdictions and organisations,” a spokeswoman said.

PEXA noted ARNECC’s suspension of the interoperability program, which was to be the mechanism for introducing competition and said it was seeking clarity from regulators about the implications for the currently regulated deadline to deliver interoperability in December 2025.

Interoperability would allow the parties involved in settling a property transaction – lawyers, conveyancers and banks – to use any service provider, instead of having to use PEXA, which was originally a venture between Australia’s largest banks and various state governments. It was privatised in 2019.

PEXA rival Sympli said intervention was needed to ensure competition.

Sympli, and the NSW Productivity Commission report, both warn of the dangers to other parts of the property market from PEXA also gaining a monopoly on the data that could allow it an unfair advantage as it expands into related business areas like conveyancing services.

“This PEXA monopoly needs to be tackled head-on by government. We now know that it is building out a data empire similar to what we see in Google and Facebook but with little to no government regulation. This is a real risk and we know competition is the best way to drive accountability,” Sympli chief executive Philip Joyce said.

The commission report says digital platforms like PEXA effectively act as gatekeepers between downstream firms in the conveyancing ecosystem and their customers.

It says a PEXA merge with a bank could have an impact on the entire home loan market.

“Given the incumbent (operator PEXA) currently has a complete picture of the home loan market in some jurisdictions, any data sharing agreement or merger between the incumbent and a bank may increase the risk of co-ordination and have serious implications for competition in the home loan market,” it says.

The Commonwealth Bank owns 23.9 per cent of PEXA.

“PEXA has long supported equal access to national data for public policy and economic purposes and offers all financial institutions the same access to information about the home loan market,” PEXA said.

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