Conveyancers to refer WA Government to ACCC
Conveyancers to refer WA Government to ACCC
The body that represents property conveyancers in Western Australia will ask the ACCC to investigate whether changes made by the Western Australian Government are legal.
Dion Dosualdo, Chief Executive of the Australian Institute of Conveyancers said it believed the Government’s mandate that by December 1, 2017 all property transactions must be conducted via an electronic platform rather than via traditional paper-based systems. raised concerns about anti-competitive implications.
“The WA Government, through Landgate, has invested $39 million of tax payer’s money in the loss making PEXA electronic conveyancing platform. PEXA is currently the only electronic conveyancing platform available to use in Australia,” Mr Dosualdo said.
“In 2016, PEXA made a loss of $40 million. The only way PEXA will be profitable is if Landgate and the land registries in other states mandate the use of electronic conveyancing that (in the absence of a competitor) creates an effective monopoly for PEXA. WA is the first cab off the rank with NSW and Victorian land registries set to follow.
“PEXA’s owners include the big four banks, Macquarie Bank, Link Market Services, the WA, QLD, NSW and Victorian state governments and large private investors. The big end of town and the state governments have invested heavily in PEXA and the lack of natural demand for the platform is resulting in correspondingly large losses. Mandating the use of PEXA is a way to force property buyers and investors to use their failing business. This is anti-competitive.
“On top of this, the consumer is going to pay more as result. PEXA fees represents an average increase in conveyancing costs of 20% to a property seller and an 11% increase in costs to a property buyer.
“Mandating PEXA will produce a massive value shift from mum and dad property investors to the big four banks, Macquarie, private investors and the State Governments.
“And that’s not the only downside. Industry experts say the planned mandate will result in more than 1,000 sudden job losses in WA in December this year, across financial services, conveyancing and the legal industry.
“In 2014 WA Lands Minister Terry Redman told Parliament that use of electronic conveyancing platforms, including PEXA would not be mandated and the industry would be able to transition to using electronic conveyancing at “its own pace”. We call on the WA Government to honour this commitment.”
Mr Dosualdo pointed to the fact that PEXA is being prepared for an IPO sometime in 2017 or early 2018 as reason for the sudden move to mandate the use of such platforms.
“The state governments are in bed with the banks and private industry in a move that will create a Government sanctioned monopoly. Landgate with its 15.9% shareholding in PEXA stands to gain $159 million from a proposed $1 billion float of PEXA when it is profitable. The only way PEXA will be profitable is if Landgate and the other land registries mandate the use of this monopoly.”
“The banks are lining up to double dip - pocket the efficiency savings, not pass on a cent of savings to buyers and sellers, and also see an increase in the value of the PEXA business when it IPOs.”
Despite all the claims for the merits of PEXA and the benefits it has not been supported by the industry which finds the current settlement system more efficient and cost effective. The failure of PEXA demonstrates there is no natural demand for it.
It is also significant that the Chairperson of the regulator of electronic conveyancing platforms in Australia (ARNECC) is also WA’s Land Registrar who is responsible for enacting the mandated use of PEXA in WA. AICWA questions whether there is a conflict of interest between the Registrars Statutory power and the commercial interests of Landgate. Further, the CEO of Landgate also sits on the board of PEXA and clearly has an interest in use of the electronic conveyancing platform being mandated.
The AIC WA does not object to electronic conveyancing. We simply ask that our clients are provided with a competitive environment in which to buy and sell property and that the transition to electronic conveyancing does not adversely impact them.
This large scale change requires more than one year to implement successfully and should not be mandated. There is no obvious regulatory or policy imperative to mandate this change. Buying and selling a property is highly stressful and we are very concerned for our clients during this turbulent time of conversion to the mandated platform when the full implications have not been considered.
Recent legislative changes in WA, NSW and Victoria which allow the move to mandate the use of PEXA all pointed to voluntary participation and longer phased uptake periods to avoid impacts on fees for property buyers and sellers, businesses and jobs. For example, in NSW the Legislative Impact Study indicated that a 13-year uptake period should be expected.
The origins of PEXA
What started as a Government initiative through COAG to improve property transaction in the national interest has ended up as a commercial enterprise that has raised capital in the order of $250 million over the past 3 years to stay afloat.
According to Landgate’s own annual report, in 2011 the object of NECDL (now PEXA) was to “create and operate a system to provide an efficient, competitive system to settle real property transactions, lodge instruments with Land Registries and pay associated duty and tax obligations electronically, without increasing the cost of such services to the community or excluding any current market participant from operating in the new electronic environment”.
Interestingly in 2012 the underlined statement was deleted from the objective of PEXA.