The vast majority of the conveyancing industry would likely hold the view that the digital era is unstoppable and that it has huge benefits. However, there is also an awareness that there are risks along the way and that with any major structural change there will be winners and losers. In the video below we hear about the benefits. Directly below the video, The Australian Institute of Conveyancers Western Australia outline some recent concerns and risks.
Below – Official statement from AICWA:
Consumers to wear costs of mandated e-conveyancing
Regulation gazetted by the Minister for Transport, Planning and Lands Ms Rita Saffioti to force the use of electronic conveyancing will deliver the banks efficiencies and profits and leave consumers out of pocket.
The Australian Institute of Conveyancers (WA), the peak body representing property conveyancers in WA has warned the rush to mandate, when there is only one provider – PEXA – will see consumers wear the associated increase in costs.
AIC WA chief executive officer Dion Dosualdo said that in mandating e-conveyancing the Government has effectively sold out the interests of mum & dad homebuyers and sellers in favour of their fellow shareholders in monopoly operator PEXA.
“These fellow shareholders include the big four banks and Macquarie Bank. We know the banks can smell the profit they will make out of a Government sanctioned mandate,” Mr Dosualdo.
“The mandate imposes a $110 unregulated fee on every property purchaser and seller. This is the PEXA fee that will be incurred by every purchaser and seller who is forced to use the system. That adds up to more than $10 million per annum that WA buyers and sellers will pay to PEXA. But it doesn’t stop there – as there is no regulator to stop PEXA continuing to put its price up once it has a monopoly through the mandate the State is giving them.
“Considering PEXA’s revenue last year was approximately $11 million it’s clear why the company and its shareholders are pushing hard for the mandate which will deliver them more than $10 million per year.”
Minister for Lands, Rita Saffioti, appears to have ignored or discounted the concerns raised by AICWA regarding:
- the lack of consumer protection due the lack of regulated price control;
- the lack of downward pressure on prices whilst PEXA’s monopoly is protected by significant barriers to the entry for competitors; and
- the conflict of interest whilst Landgate is a shareholder in PEXA and the employer of the WA Registrar of Titles who chairs ARNECC (the quasi regulatory authority for e-conveyancing). ARNECC is the decision maker that would need to approve a second ELNO
“In addition, members have highlighted the clear and present danger posed to WA consumers by one of the fundamental inadequacies of the system – the lack of account number/name authentication. In fact, it’s only a matter of time before this results in a loss similar to that of a WA grandmother who was recently defrauded of $557,000.,”Mr Dosualdo said.
“CEO of PEXA, Marcus Price, has previously voiced the intention to deliver an estimated $1b return to investors by floating PEXA before the end of 2018. AIC WA fears that the government may have rushed the decision to regulate to accommodate PEXA’s IPO timeframe.
“AIC WA also questions whether the interests of WA consumers have been
ignored in the rush to fix the State’s financial woes and fund election promises such as Metronet.
“You don’t have to be a rocket scientist to realise that the value/return to shareholders will be greater if the float happens in an environment where PEXA is a monopoly without pricing control and the use of their product is enforced by regulation.
“In maximising Landgate’s value/return from their investment in PEXA, the State Government also makes the rumoured sale of Landgate that much more attractive.”
© 2017 Legal Practice Intelligence