One of Australia’s largest legal and conveyancing technology providers, GlobalX, is expressing concern that PEXA is taking advantage of its monopoly position in the Australian property industry.
GlobalX chief executive Peter Maloney said boundaries need to be enforced on PEXAs activities.
“In the absence of a proper regulatory framework, PEXA is free to do what it wants. The company was handed a gift by the Council of Australian Governments (COAG) to establish an Electronic Lodgement Network (ELN) and in the absence of any real regulation is well and truly capable of abusing this gift,” Mr Maloney said.
“PEXA’s recent statement about intending to cut out the ‘middle man’ for title searches shows a complete lack of understanding of the industry it is attempting to monopolise. Australia’s information broker market is highly competitive, it is price sensitive and the actual cash profit from a NSW Certificate of Title as low as $1 to $2.
“Surely, PEXA cannot believe that it will pull the wool over consumers’ eyes by saying that it will only take a ‘small margin’ after it has removed all competitors.
“It’s a bit rich for PEXA to claim that the PEXA Plus Marketplace is disrupting the information brokerage market, and an even longer bow to try and create fear by using a $30.38 estimation as the price of a NSW Title Search. In fact, the average price a conveyancer pays for a NSW Title Search is $12.50.
“And here is where PEXA’s disruption is totally missing the mark – and dragging the industry to a new low. What PEXA does not recognise is how margins earned on Land Title searches are reinvested to enable the industry to operate efficently. At GlobalX we use that margin to invest $5 million into our free-of-charge cloud based conveyancing workflow software Matter Centre, we spend $4 million on our practice management software for mid tier law firms and we spend $7 million to continually innovate new legal tech products in a highly competitive market.
“PEXA have stepped well outside of their mandate by trying to leverage its near 8,000 members to crush downstream competition. This type of power is unprecedented in modern markets, and it is the regulator’s responsibility to curb this behaviour.”
Mr Maloney says that in the latest Draft Revision Version 5.1 of the ARNECC Model Operating Rules, which governs how an ELNO must operate, ARNECC has proposed that an ELNO can participate in adjacent services if those services are placed into a separate entity with internal governance for Chinese walls.
“We are astounded that ARNECC would offer up such a position. In essence ARNECC are proposing that PEXA can create a Holding Company, put the ELNO – PEXA’s Exchange into one subsidiary, become a conveyancer in a different subsidiary and then throw an Information Broker contract into a third legal entity. In this environment the foundations are being set for PEXA to control the complete end to end conveyancing process,” Mr Maloney said.
“Whilst competition is on the way, PEXA is a pure monopoly with the perfect network effect as the only company in Australia that can lodge and financially settle a four-party transfer of title.
“PEXA’s ELNO can be likened to other key infrastructure assets in Australia. If the only way Victorians and Western Australians can receive the keys to their newly purchased property, or a vendor can have sale funds released, is to have a lawyer or conveyancer use the PEXA platform then, surely, this poles and wires play must be classed as critical infrastructure.
“If PEXA is allowed to continue to exercise its monopoly, our industry will suffer significantly. Contrary to PEXA’s ‘disruptor’ messaging, the company’s current activities will do anything but. If PEXA is enabled to extend its monopoly into adjacent digital services to control a complete end-to-end conveyancing process, PEXA will make any competition and innovation in the legal and conveyancing tech space screech to a halt.
“This would result in fewer high-skill jobs for Australians, less competition, less innovation and the derailing of a thriving tech industry.”