The Evolution of Electronic Settlements in Victoria

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An Expensive Necessity or a Vital Advancement?

Introduction

Over the past decade, the conveyancing process in Victoria — and Australia more broadly — has experienced a revolution in the form of mandatory electronic settlements.

This move, while heralded by government and industry leaders as a necessary step toward modernisation and security, has had significant ramifications in terms of cost, operational change, and competition within the marketplace.

This article explores the legislative background that led to mandatory electronic settlements, evaluates the dominance and effect of the PEXA platform, considers the lack of viable alternatives, compares Australia’s system globally, and concludes with a discussion about the future direction of electronic conveyancing in Victoria.

The Regulatory Framework for Electronic Settlements

Electronic settlements in Victoria are governed by a combination of Commonwealth, State, and regulatory instruments.

The principal legislative foundation is the Electronic Conveyancing (Adoption of National Law) Act 2013 (Vic), which adopted the Electronic Conveyancing National Law (ECNL) into Victorian law.
Reference: Electronic Conveyancing (Adoption of National Law) Act 2013 (Vic)

This Act establishes the regime for Electronic Lodgement Networks (ELNs), enabling documents to be lodged with land registries electronically, and setting out the rules for Electronic Lodgement Network Operators (ELNOs).

Further, the Victorian Government through Land Use Victoria mandated electronic lodgement for most conveyancing dealings from 1 August 2019 under various "Participation Rules Instruments" made pursuant to the Transfer of Land Act 1958 (Vic).
Reference: Transfer of Land Act 1958 (Vic)

The Model Participation Rules and Model Operating Requirements, administered by the Australian Registrars’ National Electronic Conveyancing Council (ARNECC), provide the national operational framework, ensuring all practitioners using ELNs meet strict verification of identity, security, and compliance standards.
Reference: ARNECC Model Participation Rules

The Introduction and Rise of PEXA

PEXA (Property Exchange Australia Ltd) was initially conceived through a partnership between government bodies and private enterprise to pioneer the e-settlement revolution.

Its launch was supported by COAG (Council of Australian Governments) as part of a broader plan to deliver a national electronic conveyancing system.

PEXA introduced a centralised digital workspace where legal practitioners, conveyancers, financial institutions, and land registries could:

  • Collaboratively prepare settlement documents;

  • Disburse funds electronically through the Reserve Bank of Australia;

  • Lodge dealings immediately post-settlement, drastically reducing the risk of title defects.

PEXA quickly captured the entire market because of its first-mover advantage and the network effect: once the banks adopted PEXA, practitioners were compelled to follow to ensure seamless settlement.

The Financial and Operational Costs of E-Settlement Adoption

The benefits of electronic settlement, although substantial, have been offset by significant financial costs imposed on practitioners and their clients.

  1. Transaction Fees:
    Each transaction on PEXA attracts significant fees, currently ranging from approximately $40 to over $120 per dealing depending on transaction complexity.
    Reference: PEXA Pricing Schedule

  2. Infrastructure Investment:
    Firms were required to invest in new technology infrastructure, including secure networks, multi-factor authentication protocols, and integration of trust accounting systems and compliance.

  3. Cybersecurity and Insurance Costs:
    Cyber insurance has become essential, adding substantial premium increases due to increased exposure to hacking, fraud, and identity theft risks, especially given the cyber-verification obligations placed on conveyancers under the Model Participation Rules.

  4. Compliance Training:
    Practitioners needed to undertake training to meet verification of identity requirements, client authorisation protocols, and digital signing requirements, thereby increasing operational costs.

  5. Loss of Competitive Pressure:
    Because PEXA held a monopoly for several years, pricing remained relatively high, with limited incentive to reduce fees or innovate for practitioners' benefit.

Alternative ELNOs and Why They Have Not Been Widely Adopted

Although competition was intended through the ELNO licensing regime, the reality has been starkly different.

Notable competitors include:

  • Sympli, backed by the ASX and InfoTrack;

  • Lext, an emerging ELNO in limited stages.

Despite being licensed, these platforms have not achieved widespread adoption for several reasons:

  • Interoperability Issues: Until recently, ELNOs could not communicate with each other. If one party used Sympli and the other PEXA, settlement was impossible. This entrenched PEXA's monopoly.
    Reference: ARNECC Interoperability Project

  • Banking Integration: Financial institutions integrated early with PEXA and have been slow to connect to competitors, meaning transactions with bank loans still overwhelmingly favour PEXA.

  • Commercial Risk: Conveyancers and solicitors, operating under tight deadlines and strict fiduciary obligations, were unwilling to risk a delayed or failed settlement by using an unproven system.

  • Limited Product Maturity: Competitors have struggled to offer a platform as sophisticated or reliable as PEXA, making switching impractical and risky.

International Comparison: How Does Australia Stack Up?

Compared to other jurisdictions, Australia’s e-settlement infrastructure is uniquely advanced.

  • United Kingdom: Although the HM Land Registry has introduced digital signatures and certain e-lodgement functions, full financial integration remains absent, and most settlements still involve manual banking.

  • United States: Due to its county-based title system, settlements remain paper-heavy and vary significantly between jurisdictions.

  • Canada: Provinces like Ontario have adopted limited electronic registration, but full financial settlement integration (disbursement and title update simultaneously) has not been achieved.

  • Singapore: A pioneer in e-conveyancing trials, yet full transactional settlement via electronic platforms has not yet been mandated.

Australia’s combination of electronic documentation, financial disbursement, and immediate title registration post-settlement is unique and widely regarded as the most complete system globally.

An Expensive Exercise for Victorians

Victorian consumers have ultimately borne much of the cost for this transition:

  • Transactional costs passed onto consumers;

  • Higher legal and conveyancing fees to reflect operational risk and compliance burdens;

  • Increased insurance premiums protecting against new cyber risks.

While consumers benefit from faster settlements and improved fraud protections, they are paying a premium that, arguably, could have been reduced if real competition had been fostered earlier in the evolution of e-settlements.

Where To From Here?

The future of electronic settlements in Victoria — and Australia more broadly — hinges on several key developments:

  1. Mandatory Interoperability:
    The Federal Government and ARNECC have committed to making interoperability between ELNOs mandatory. Once fully implemented, this should enable practitioners to choose between providers without fear of settlement failure, finally introducing real price competition.

  2. Expansion of Competition:
    It is hoped that competitors like Sympli and future entrants will gain sufficient adoption to put downward pressure on pricing and drive innovation in service quality.

  3. Legislative Refinement:
    Continuous updates to the Electronic Conveyancing National Law and ongoing consumer protection reforms will hopefully ensure better outcomes for all parties involved.

  4. Increased Consumer Awareness:
    Consumers may become more active in questioning settlement costs, demanding transparency, and encouraging their practitioners to adopt cost-effective solutions when feasible.

Victorian Property Settlements will continue to monitor these developments closely, ensuring our clients benefit from all innovations, while at the same time advocating for fairer cost structures and enhanced consumer protection.

For any further information regarding electronic settlements, compliance requirements, or how the latest regulatory changes could affect your transaction, please contact:

David Dawn
Licensed Conveyancer
Victorian Property Settlements
PO Box 11220 Frankston VIC 3199
Email: david@quick32.com