Interoperability (message exchange)
An ELNO market that gives choice to customers
Today, all parties to a conveyancing transaction will have to subscribe to the same Electronic Lodgment Network Operators (ELNO) to complete the transaction. With more than one ELNO now operating in NSW, lawyers and conveyancers should be able to transact efficiently and securely while only subscribing to the ELNO(s) they choose.
One solution is to require ELNOs to connect their back-end systems, or ‘interoperate’. The concept of interoperability is familiar from other industries – for example, Telstra customers can phone Optus customers without having to set up an account with Optus. Similarly, in eConveyancing, with interoperability, conveyancers or lawyers with one ELNO will be able to complete a transaction with conveyancers and lawyers of another ELNO, without having to subscribe to all operating ELNOs. Of course, the messaging between ELNOs will present different risks and solutions to that of phone operators, but the principle remains the same.
The NSW and South Australian (SA) Governments are working closely with industry to develop a national solution to interoperability. This work builds on the substantial analysis to date, including the IGA review, the IPART report and the NSW Nicholls working groups (each described further below).
This work has been designed to complement and support the investigations by Australian Registrars National Electronic Conveyancing Council (ARNECC), the Australian Competition and Consumer Commission (ACCC), and the review of the eConveyancing Intergovernmental Agreement. Over time, as the market structure and preferred model become clearer, we will support more detailed investigations into the topics that need to be resolved.
In this next phase, NSW and SA will work closely with other jurisdictions, industry, peak bodies, and regulators on specific topic areas comprised of members with expertise in those areas
It is crucial that Government partners with industry, to achieve a reform that meets industry’s needs. NSW Office of the Registrar General (ORG) recognises the significant amount of time and expertise that this partnership approach demands of industry, and is grateful for industry’s ongoing commitment to this process.
For updates on the NSW Government’s progress on interoperability, please subscribe to the Registrar General emails.
What is interoperability?
Interoperability refers to a connection between ELNOs that would allow a customer connected to one Electronic Lodgment Network (ELN) to engage in a conveyancing transaction with another customer who is connected to a different ELN.
Interoperability is widely used by regulators in other industries as the regulatory tool to manage what is called a network effect.
The eConveyancing market is a good example of a market with a network effect because the value of an ELNO’s services provided to any one user increases as more solicitors, conveyancers and financial institutions use that ELNO’s services. This means that larger and more established ELNOs have a competitive advantage over smaller new entrants, since their users can connect with a larger number of other users to complete transactions.
Regulators in networked industries establish rules and standards around interoperability to remove this barrier to new entrants and for real competition to emerge.
Interoperability also gives customers choice and supports competition. Competition can lead to better customer outcomes, including higher quality services, lower prices and ongoing innovation.
Interoperability may take many different forms. A potential model is outlined below. This model was proposed by NSW’s Independent Pricing and Regulatory Tribunal in their draft report.
This model of interoperability shows two ELNOs, ELNO A and ELNO B having a direct connection with one another and sharing information. In this particular model, one of the interconnected ELNO’s functions will be to complete financial settlement and lodge information.
What has happened to date?
Review of the intergovernmental agreement on eConveyancing:
In September 2018, the Australian Registrars’ National Electronic Conveyancing Council (ARNECC) commissioned Dench McClean Carlson (DMC) to review the Intergovernmental Agreement for an Electronic Conveyancing National Law (IGA).
In February 2019, DMC published an Issues Paper reviewing the IGA. The IGA Issues paper included some discussion on interoperability but did not express a preliminary view on whether or not interoperability should be mandated.
In July 2019, DMC published a Draft Final Report suggesting a ‘shallow’ form of interoperability.
NSW Government’s response:
NSW forums and working groups:
In December 2018, the NSW Government held a forum on interoperability with key stakeholders including ELNOs, major banks, the NSW Law Society, the Australian Institute of Conveyancers, insurance representatives, the NSW Independent Pricing and Regulatory Tribunal, the Australian Competition and Consumer Commission and the Reserve Bank of Australia.
In February 2019, the NSW Government published a Directions Paper on interoperability and held a second industry forum. The NSW Government, state and national peak industry groups and regulatory bodies identified the need to:
- investigate baseline eConveyancing interoperability requirements that contribute to a nationally consistent ‘end-state’;
- develop workstreams that can be considered with the IGA review; and
- focus on promoting competition, consumer choice and national consistency in the area of eConveyancing.
In March – July 2019, the NSW Government held industry working groups, under an independent chair, Dr Rob Nicholls. The purpose of the working groups was to inform decisions about the way forward with interoperability.
Independent pricing review
In March 2019, NSW’s Independent Pricing and Regulatory Tribunal (IPART) published an Issues Paper on price regulation in the eConveyancing market. The paper noted the benefits of competition.
In August, IPART published a Draft Report again highlighting the benefits of interoperability in the eConveyancing market.