A NSW parliamentary inquiry into PEXA and its practices is expected to conclude that the company and the country’s major banks deliberately hindered efforts to open the property title transfer system to competition.
That is one of the findings contained in a draft report authored by the parliamentary committee but not yet released. The inquiry has been investigating attempts to create more competition in the market by allowing ASX Limited-backed rival Sympli to access PEXA’s systems.
The committee report, which remains up for discussion, comes as PEXA faces down a move from the NSW pricing regulator that would force it to reduce its user fees, a proposal that has slashed its market capitalisation.
PEXA is a roll-up of monopoly settlement services once operated by state governments and later merged. The company was eventually acquired by Macquarie, then the Commonwealth Bank and Morgan Stanley Infrastructure. It was listed on the ASX in 2021.
Its model has been under intense scrutiny after the regulator of digital settlements, known as ARNECC, decided earlier this year that forcing PEXA to open its systems to competing companies was unworkable.
The unpublished parliamentary inquiry report due to be released this year says PEXA should be pushed to open its systems, finding the company “had limited commercial incentives to support reforms that would reduce its market power and expose it to greater competitive pressure”.
The renewed political pressure comes as PEXA – which has seen its share price fall 55 per cent since March – and many of its major investors push for the Independent Pricing and Regulatory Tribunal to reconsider its decision to force down the prices of its platform by 20 per cent.
PEXA chief executive Russell Cohen said this would threaten investment in the platform, including on cybersecurity. Investors said changing the rules after state governments privatised the asset created a bad precedent for investment in regulated digital infrastructure companies.
Angry investors – including Paradice Investment Management, Equity Trustees and Australian Ethical Investment – have told the tribunal that the draft ruling introduced a “new regulatory methodology” that was a “significant departure from the regulatory framework that has underpinned investment in PEXA since electronic conveyancing fees were first regulated”.
The “degree of regulatory uncertainty” was “relevant not only to existing shareholders, but also to future private investment in regulated digital infrastructure”, the investors added in a submission.
The tribunal was initially planning to decide by the end of this month, but has pushed the determination back to the end of October.
During NSW parliamentary hearings in February, PEXA disputed claims it had challenged the scope of interoperability, asserted intellectual property rights and discouraged banks from participating in the reform process.
Still, the committee has found the company had “not consistently demonstrated a commitment to the objectives of interoperability reform and that its conduct has, at times, contributed to stakeholder concerns regarding the pace and direction of the reform program”.
The committee will recommend that the state push ARNECC to create a “revised implementation road map” for interoperability, adding “increased competition is likely to place downward pressure on fees over time and limit the ability of any provider to take advantage of its dominant … position”.
Source: https://www.afr.com/companies/financial-services/leaked-nsw-inquiry-says-pexa-and-banks-deliberately-hinder-competition-20260921-p60s82