With the Property Exchange of Australia (PEXA) aiming for a completely paperless mortgage process nationwide, a number of steps have been implemented to ensure that everything remains compliant and maintains integrity along the entire property journey.
As an electronic lodgement network operator (ELNO), PEXA is currently governed by the Australian Registrars’ National Electronic Conveyancing Council (ARNECC) – a body that has membership comprising of the Land Titles Registrars from each state and territory.
“PEXA is a deeply regulated company in that we have annual audits, annual IT, penetration tests, all sorts of things both technical and digitally orientated,” Marcus Price, CEO of PEXA, told Australian Broker
ARNECC operates under the Electronic Conveyancing National Law (ECNL) as well as its own Model Operating Requirements (MOR) for ELNOs and Model Participation Rules (MPR) for banks and other participants using these platforms.
With PEXA seeking to become more pervasive across Australia, there were plenty of controls already in place, Price said. One example is the firm’s pricing policy which has been approved by ARNECC and is strictly enforced.
“Our regulatory framework and our pricing framework really is quite well nailed down.”
In fact, the sheer size of the regulatory burden was a barrier to entry for any other parties seeking to enter the same space, Price said.
For instance, ELNO licences are granted by ARNECC only after certain select criteria are fulfilled including pricing, accessibility, integrity of processes, and integrity of software.
PEXA has also been asked to self-certify certain parts of the process which are later audited by ARNECC. The Australian Prudential Regulation Authority
(APRA) does the same with banks, Price said.
“It is so heavily regulated that it’s a burden on the company. We accept the burden because we understand the importance of the industry but it doesn’t come without a cost.”
Jean Villani, chair of ARNECC, told Australian Broker
that the regulator undertakes a range of monitoring measures, including compliance examinations of ELNOs (and their subscribers), compliance assessments of ELNO applicants prior to licencing, annual reviews, certification, and general compliance monitoring.
“Legislation sets out the scope and purpose of compliance examinations and the obligations of ELNOs to comply with the examinations,” she said. “The laws also allow registrars to refer any matter revealed prior to, or during, and examination to another appropriate authority – including the industry regulator or law enforcement agencies.”
Price said that in the event ARNECC needed to act, it most definitely had teeth.
“They could stop us operating tomorrow. How many more teeth do you want?”
The regulator also has a step-in right to take control of PEXA if it wanted to, he added.
To further complicate matters, PEXA has also had to sign operating agreements with registrars in all states and territories, each of which has its own subtle details to be followed.
“We’ve got many masters,” Price said.
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