Pathway to Interoperability

Relationship between a property transaction & the “Workspace”

The most common property transaction in Australia is a Purchase and Sale, where a Vendor sells property to a Purchaser. These parties are represented by Lawyers or Conveyancers (“Practitioners”).

The majority of these transactions also involve Banks – a Discharging Mortgagee (Vendor’s side) and an Incoming Mortgagee (Purchaser’s side).

All four parties must co-ordinate and agree on key transaction details before lodgment and settlement, including:

Settlement date and time
Duty details (for the State Revenue Office)
Land title documents (for the Land Registry)
Financial settlement instructions (for the Financial Institutions + RBA)

This process is managed through ELN (Electronic Lodgment Network) platforms, which provides users a secure, shared online space – called a Workspace – to facilitate collaboration.

In the current state, all parties must use the same ELN platform to collaborate in the same Workspace.

Interoperability (IOP) enables parties to work together in the same Workspace, even if they use different ELN providers.

Current state for Transfers – PEXA monopoly and network effect

The entire industry is currently onboarded to PEXA due to regulatory mandates.

All parties, practitioners and banks, transact on PEXA, either through the PEXA web application or via integration.

This means that today, Lodgment and settlement are always processed through PEXA.

Even though Sympli has a platform which users can complete all transactions in NSW and QLD, customers are restricted by the number of subscribers on the network – and specifically banks willingness to multi-home

Note: Requires both banks and practitioners to register PEXA

Non IOP approach – Entire industry must multi-home

All parties – practitioners and banks – must operate within either PEXA or Sympli, accessing the platform via web application or integration.

For a transaction to proceed, the entire industry must be onboarded to the same ELN.

Each ELN has its own lodgment and settlement services, which it uses to complete the settlement and lodgment process.

Note: Not a reasonable ask of the industry to multi-home – doesn’t provide true customer choice
Requires both banks and practitioners to register with each ELN, which means running dual processes, adding up front co-ordination effort to every transaction (“which ELN are we completing this transaction on?”) – and in some cases maintaining two separate digital certificates.

IOP – Direct Connect – Practitioner First approach

The Practitioner First Release of Interoperability will allow practitioner subscribers to choose between Sympli and PEXA, without being limited or disadvantaged by their subscriber network access.

Banks will continue to exclusively subscribe and use PEXA for all transactions, ensuring their existing user experience and processes are maintained until bank-related concerns are addressed in later releases.

Lodgment and settlement – including the movement of Trust Funds – will continue to occur through the PEXA system, which will remain the RELNO for all IOP transactions (as they represent the incoming mortgagee in the transaction).

Note: Introduces the first phase of ELN industry resiliency and redundancy
Practitioners will not need to register to both ELNs or maintain dual processes – they can choose and transact solely on one ELN if they wish
We have only shown the Purchaser on Sympli in this example, but it could also be the Vendor or other practitioner roles
This marks the first official release of IOP, replacing the current “Pilot Refinance” phase (previously known as “Release 1”)
Practitioner first limits Sympli use for practitioners only – because of this, PEXA is RELNO to support the FIs.

Full IOP – direct connect model previously endorsed by ARNECC

Full IOP – will allow banks to choose between Sympli and PEXA.
Lodgment and settlement will occur through the RELNO, which may be either Sympli or PEXA
Extended resiliency and redundancy
Market resiliency – Reducing single point of failure.

Note: We have shown two examples below to explain how the ELN that hosts the Incoming Mortgagee becomes the RELNO and therefore will lodge and settle the workspace.

Frequently Asked Questions

What were the key points or outcomes of the previous mandated interoperability program? And why did it fail/get delayed?

The interoperability reform was paused last year due to issues raised by the banks around financial settlement. The legislation has been passed, regulations set, and experts agree that interoperability is the best way to deliver competition, however the banks had issues.

What is ‘Practitioner First’?

Practitioner first is the first phase of interoperability where the banks can remain on PEXA – ensuring there is no impact to their experience or processes – and practitioners will have the choice to use Sympli, without having to worry about what ELN the other parties in the transaction wish to use.

The best way of understanding this is a retail-wholesale model where PEXA’s infrastructure will be used to settle property and Sympli can offer choice to lawyers and conveyancers in the workspace.

How will the new interoperability ‘Practitioner First’ release work for PEXA and Sympli users?

If Practitioner First is delivered, there will be no change for users, except that they can choose which platform to use for their business.

Any threat of impact to the existing user experience would be contrary to the Model Operating Requirements, and is the control of each ELN individually.

Will I have to use both Sympli and PEXA, or can I choose a single ELN?

You can choose Sympli or PEXA, which ever suits your business model the best. You will not have to use both.

What is the current status of interoperability in the industry?

The project is currently on hold, pending a decision from the Government regarding the next steps. We are requesting that a decision be made within this year, as more than seven years have passed without resolution.

What is the new approach to interoperability, and how does it differ from the previous one?

The new approach being proposed (Practitioner First) is a stepping stone for full interoperability and will enable choice for practitioners sooner – removing the dependency of having the banks concerns resolved before competition can be introduced.

In this release the banks remain on PEXA and Sympli will open to the practitioner market, similar to a retail-wholesale model. We ultimately want full interoperability to give the market resilience, and to provide the banks choice in their ELN provider as well.

Why have so few law firms participated in interoperable transactions so far?

Interoperability reform is not yet open to participants as the programme has not been completed.

What are the reasons behind banks' resistance to interoperability?

Banks received letters from the monopoly provider PEXA stating that their services would degrade in an interoperable world (which is not true, and is entirely within the control of each ELN) and nothing was done by ARNECC to reassure them of this, and hence they withdrew from the program due to a lack of confidence.

How will my letter or any additional support help with the interoperability program proceeding?

We are urging Governments to make a decision by the end of this year. It has been nearly seven years since this journey began, and practitioners still lack choice. Governments need to hear directly from you – your voice is powerful and influential. Your letter can make a significant impact in encouraging them to act.