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Speaking yesterday (28 August) to the House of Representatives’ standing committee on economics inquiry into promoting economic dynamism, competition and business formation, Sympli CEO Philip Joyce called for a better regulated and enforced interoperability plan across the e-conveyancing industry.
The CEO of the electronic property settlement provider said “everyday Australians”, small businesses, and the national economy were missing out on “significant productivity” due to the monopoly in the e-conveyancing market.
Interoperability is the ability of groups to exchange information and to operate in conjunction with each other and has been pegged as key for facilitating competition in the e-conveyancing sector.
The addition of interoperability aims to allow each party in the settlement process (for example, lawyers, conveyancers, and financial institutions), to use the electronic lodgement network operator of their choice, irrespective of what the other transacting parties choose to use.
However, ongoing delays have pushed back interoperability to around 2025.
Mr Joyce suggested that the incumbent provider (and Sympi’s competitor) PEXA had a monopoly that means there was “no real pressure to reduce prices, no drive for service innovation and no urgency to make the network more resilient”.
PEXA was launched in 2012 as a government initiative, the National E-Conveyancing Development Ltd, which in 2018 was privatised and renamed to the Property Exchange Australia Ltd (PEXA).
He added that PEXA had an 88 per cent gross margin that was “almost 100 per cent market share in mature states”.
While an agreement was made in 2021 to encourage market competition through interoperability requirements between Electronic Lodgment Network Operators (ELNOs), Sympli has reiterated that the implementation of the requirements has been long delayed, alleging that it was “in the clear interest of the incumbent to delay competition in the market”.
Sympli claimed that PEXA has been deliberately slowing the process by withdrawing from the joint working group that was developing the specifications for interoperability for approximately six months, adding it “consistently missed deadlines”.
Mr Joyce said there had been a target for interoperability to be implemented in NSW and Queensland by 2025, but “there is a very large difference between announcing a date (and having that day as part of our regulation) and having that regulation robustly enforced”.
He said: “We’ve had, in my time as CEO (which is nearly three years), about 10 different date announcements and none of them has been kept because there’s nothing in the regulation [enforcing it] … there’s no enforcement regime to hold people in charge of networks – myself, my counterpart, my competitor – to account.
“The only sanction in today’s environment, believe it or not, is the suspension of a network.”
Mr Joyce told the committee that PEXA’s dominance of the e-conveyancing space meant that any threats to suspend the network, or stop it from completing electronic settlements, were not credible.
The PEXA platform settled more than $900 billion of transactions in the year to June in 2022, with its financial year 2023 results revealing that over $800 billion in properties were settled using the platform.
“There’s so much incentive at play here from a profit point of view I think you’re going to get the incumbent pushing back on these,” Mr Joyce told the committee.
Mr Joyce said Sympli was trying to improve the service for small businesses and “everyday Australians”, stating: “We wouldn’t be in this market if we didn’t hear time and time again from customers that there were problems to solve. If this was a richly served, highly satisfied set of customers we would have walked away a long time ago.
“But we constantly hear from all customers that they are no more efficient in their businesses today than they were in the paper days. They take more time, cost more and they’re forced to use one network.”
He compared the current fragmentation in e-conveyancing to having, “one mobile phone to talk to anyone on Telstra and then having separate phones for every other network like Optus, Vodafone, etc”.
“This is a hugely pertinent, relevant, timely example of competition reform [having] taken too long, and the privatisation of a monopoly that we’re trying to now retrofit competition to. So, unless [there is] very rigorous, robust state and federal government intervention, we’re just going to get [e-conveyancing] assistance of that really powerful monopoly,” Mr Joyce concluded.
“And the people who are going to lose out the most are going to be end customers; consumers buying and selling houses, and small businesses.”
Last year Sympli provided evidence to the Australian Competition and Consumer Commission (ACCC) alleging that PEXA had refused to engage with industry bodies and spread misinformation and falsehoods.
[Related: PEXA settles more than $900bn in FY22]
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