CBA holds the keys as digital settlement reform falters, says Lawlab
By
Ian Perkins, Lawlab Managing Director
In a significant development for Australia’s property market, the Australian Registrars’ National Electronic Conveyancing Council (ARNECC) has decided to abandon its pursuit of interoperability reforms. This move, according to Lawlab, a prominent digital conveyancing firm, has left the Commonwealth Bank of Australia (CBA) in a position of unprecedented control over the nation’s property settlement system.
Ian Perkins, Managing Director of Lawlab, expressed concern over the decision, suggesting that the withdrawal of ARNECC from the reform process confirms that competition in the sector will not materialise unless the banks allow it. “ARNECC has stepped back. The regulator has effectively said it cannot fix the monopoly. That leaves Australia’s property market entirely at the mercy of the banks and the banks have made their position clear,” Mr Perkins stated.
The influence of CBA is particularly notable, given its extensive reach in the home loan market and its significant ownership stake in PEXA, the dominant electronic property settlement platform. “CBA controls around a quarter of Australia’s home loan market and owns roughly 24 per cent of PEXA, which is a level of influence over both the lending pipeline and the settlement infrastructure that is unprecedented,” Mr Perkins noted. He further highlighted the inherent conflict of interest, saying, “When the biggest lender is also the biggest beneficiary of the monopoly settlement platform, it’s no surprise the banks refuse to accept alternatives. This is a structural conflict of interest and consumers are the ones paying for it.”
Despite the existence of a viable competitor in Sympli, which has developed a comprehensive settlement platform capable of managing refinances and property transfers, Australian banks have not embraced it. Mr Perkins elaborated on this point, stating, “We can send a Sympli invite for a four-party settlement, including both a buyer and a seller with mortgages, to a bank today, but no banks will accept it. The technology is ready. The industry is ready. The only reason competition doesn’t exist is because the banks, led by CBA, refuse to participate.”
The situation, according to Mr Perkins, has become more precarious for consumers in light of ARNECC’s withdrawal from reform efforts. “PEXA’s dominance was created when state governments mandated its use after being offered shareholdings, but the monopoly is now being actively reinforced by the banking sector,” he said. He warned of the risks associated with having a single operator manage a $1 trillion settlement market, explaining, “We have a $1 trillion settlement market running through a single operator. If PEXA goes down, the entire country’s property market goes down with it. No backups. No alternatives. No competition.”
Mr Perkins called out CBA as having the strongest incentive to maintain the current situation, while also having the greatest responsibility to instigate change. “CBA is the chief culprit here. Its shareholding in PEXA mirrors its share of the mortgage market. That alignment of interests is precisely why competition isn’t emerging,” he asserted. He urged the broader banking sector to take action, stating, “With ARNECC stepping away, the rest of the banking sector must break ranks. They could unlock competition tomorrow simply by accepting Sympli workspaces.”
Lawlab is now calling for several measures to address the current state of affairs. These include a demand for CBA to clarify how its PEXA shareholding aligns with consumer interests, an appeal for all major banks to start accepting Sympli workspaces immediately, and a plea for state and federal governments to urgently address the policy vacuum left by ARNECC’s retreat. “Consumers deserve choice, resilience and competition. ARNECC has walked away from reform. The banks are blocking competition – and consumers are paying the price,” Mr Perkins concluded.