Thank you for the opportunity to speak to you at this Registrars - - PDF document

Thank you for the opportunity to speak to you at this Registrars information session.

I am aware that many of you are at different stages of understanding and experience in electronic

• conveyancing. During this session I would like to take you on the e‐conveyancing journey to date, talk to

you about our current initiatives to increase take‐up, including the requirement to lodge documents electronically and give you an insight into our future plans and initiatives to complete the transition to full paperless conveyancing. This will assist you in understanding how you can participate. I will not be going to into details on how to transact electronically but I will touch on where you can go to get this support later in the presentation.

“When you have finished changing – you’re finished”. These words are from Benjamin Franklin and they are still as relevant today as the day he said them. While change is a constant in our lives, it is the pace of that change, especially as it relates to technology, that is our biggest challenge. How do we adapt and adopt to ensure we remain relevant to our markets and capitalise on a potential competitive advantage within our businesses? My presentation will cover

• Digital disruption and brief summary of the journey to date
• Some comments on current activities underway to increase the take up of

electronic conveyancing

• An insight into our future plans and initiatives to complete the transition to full

paperless conveyancing

• affects every industry and market
• new business models in old markets
• creates new markets and services.

Disruption is certainly not something that is new. We live in a digital world where every aspect of our lives and business is now online or going online. It has created many

• pportunities to do things differently, to do business better.

This digital transformation has disrupted every industry and market globally. Traditional business and service models are being overturned or challenged to adopt, adapt or reform. Innovation and advancements in technology have been the drivers for the achievement of commercial efficiencies in western society for centuries. I often speak about the plight of the hand loom weaver almost 200 years ago when a series

• f inventions lead to the automated production of large quantities of cloth, during this time

the trade unions were fighting industrialisation and many people lost their lives in the great riots.

This highlights that disruption and its opportunities are definitely not new. All the companies on this slide have challenged the traditional entrenched mindsets or have adapted and embraced disruption to their advantage. The likes of NetFlix, Presto, Uber, Air BNB, Apple and others have all leveraged new technologies to create new markets, meeting needs of customers that at the start the customers never knew they had. Citizens, consumers and customers have embraced this disruption and in turn their expectations for service, convenience and delivery has changed. The challenge for us, is how to embrace the disruption for the benefit of our customers, stakeholders and for Landgate, and Western Australian tax payers.

• e-conveyancing is changing the industry
• registry functions are attractive investments
• emerging technology, business and delivery models
• changing community/industry expectations.

Electronic conveyancing is the biggest digital disruption that is changing all aspects of the property industry including land registries. It has the potential to change the entire way we buy and sell real property right through the value chain. Land registry functions are attractive investments for the private sector and a potential revenue generator for Governments. Both the New South Wales and South Australian Governments are now in the process of privatising their Land Registries. Technology will continue to drive new opportunities for business and delivery models across the property industry sector. There will be new business opportunities, new ways to operate that will offer many benefits to the community and those transacting. Customers want transactions that are online, transparent and centred around their needs. The online experience needs to be simple, clear, secure and efficient.

So what is Landgate doing in response to the pressures and disruption? We have embarked on a significant journey of transformation. We are seeing the digital disruption from e‐conveyancing as a business challenge and an opportunity to embrace new technologies to deliver a land transaction system that better meets the needs and expectations of Western Australians. We have a vision for our land registry services, that is shown on this slide. “Landgate, as an authoritative Land Registry service provider that is customer centric, serving interests of the State and its citizens, will, in the context of a digital national seamless economy, evolve to cater for an electronic market place for property transactions in a digital age”

There are a couple of aspects of that vision that I would like to emphasise. The first is the focus on customer and the extension of that notion to the state and its citizens. The second is the focus on the digital economy, in particular the desire to cater for an electronic market place across all land registry services.

Torrens National harmonisation Real-time processing Responsibility Simplification

Underpinning our vision are 5 key principles that are informing our decision making. Those principles are:

• Torrens – we are committed to maintaining the Torrens Principles of Certainty of Title,

Guarantee by the State and compensation by the State for loss. The integrity and certainty of the titles register must be uncompromisable.

• National Harmonisation – we are committed to working in partnership with other

Australian Land Registries to harmonise our policies, processes and systems to the extent possible.

• Responsibility – we are committed to strengthening our relationship with industry to

ensure the WA titles register maintains the highest integrity and relevance in a digital economy.

• Simplification – we are committed to making administration of the land titles register

as simple as possible. We are embracing Albert Einstein's philosophy that “everything should be as simple as it can be – but no simpler’

• Real Time Processing – we are committed to move to a place where the WA titles

register has maximum value in the digital economy as is it being maintained in real time. We are seeking to reduce red tape and bureaucracy as well as leverage the benefits of automation through digital technology solutions.

COAG agreement National Seamless Economy Inter-government agreement First e-conveyancing transaction DM, M Electronic Conveyancing National Law implemented in WA Functionality extended C, WC, T Landgate Registry System (NLR) E-lodgement of all eligible documents E-lodgement of stand-alone mortgage & discharge of mortgage

Landgate has been working in partnership with industry for many years on e‐conveyancing and a great deal has already been achieved. However, there is still a lot more to be done. Who would have thought it was all the way back in 2008 that the Council of Australian Governments COAG reached agreement for a new, single national electronic system for real property transactions as part of a seamless national economy. In 2012 the Inter‐governmental agreement signed by all States and Territories In 2014 Electronic Conveyancing National Law was implemented in WA and the first e‐conveyancing transactions in WA for mortgages and discharge of mortgages were conducted. By 2015 functionality was extended to cater for caveats, withdrawal of caveats, and transfers. And last year, I introduced Requirements to lodge stand‐alone residential mortgage and discharge of mortgage documents electronically.

As a business Landgate has invested and continues to invest heavily in replacing aging land registry systems with new systems that embrace the digital age and facilitates the national electronic conveyancing approach. Our New Land Registry system and Landgate’s approach to its business has received award recognition at the highest level including:

• 22nd in the Australian Financial Review’s ‘Most Innovative Companies’ program in 2016.
• winning the 2016 Premier’s award in the ‘Developing the economy’ category
• acknowledgement in the 2016 WAITTA awards (WA Information Technology and Telecommunications

Alliance).

WA propensity to transact

Note: Includes all transaction types and all subscribers, financial institutions and practitioners registered in the jurisdiction. Source: PEXA Feb 2017

This slide is compelling from my perspective. With electronic conveyancing going live in WA across all the top five documents types in 2015, this chart shows what is happening in the transaction space right now. As at the end of February, over 600 businesses were registered to transact in WA This includes all of the Financial Institutions operating here. The chart shows the percentage of subscribers transacting by volume. Note the large number of businesses that have completed no transactions – 61% You can see from this slide there are some very active early adopters and it is my understanding that more would join in but when it comes to multi‐party transactions, the

• ther members of the industry are holding them back. This is because of the network effect

which I will talk more about in a few moments.

If your business is not one of the 600 on this slide, then you need to start taking action to come on‐board now.

(eligible documents)

Source: Landgate Feb 2017

This slide shows how many transactions are occurring as a percentage of eligible transactions.

• Overall

14.5%

• Mortgages

16.4%,

• Discharge of mortgage

23.5%

• Caveats

4.7%

• Withdrawal of caveats

5.5%

• Transfers

1.8% Points to Note There was a jump in the percentage of electronic transactions following the introduction of the requirement to lodge stand‐alone discharge and mortgages in August 2016 Since then there has been a small but steady change.

• The benefits of e-conveyancing are heavily dependent
• n the number of businesses using the system
• early adopters are being stifled by the lack of users in

the system

• the benefits of e-conveyancing are being delayed and

costs are increasing

• the situation is unlikely to improve and the benefits will

not be fully realised until more people start to use the system

• now is the time to be pro-active.

wikipedia

As you have seen on the previous slides the increase in the use of electronic conveyancing has slowed This is not unique to WA as we are observing similar trends in the other States. Our consultation and research suggests there is a great deal of support for the introduction of e‐ conveyancing from all sectors but we recognise there are a number of factors at play including:

• Resistance to change
• Perceived complexity in electronic transactions
• Additional cost of disruption in changing business practices and running dual paper and

electronic systems However, the most significant factor being put to us is that practitioners are waiting for the market to grow before committing. There are not enough conveyancers using the system yet to make the change worthwhile This is known as the Network effect. Put simply, a network effect occurs when a product or a service becomes more valuable to its users as more practitioners use it.

A simple analogy is a telephone network. The more people connected to the system the greater the benefit to all The utility and benefit of e‐conveyancing is heavily dependent on the number of practitioners using it. The more practitioners using it the greater the benefit Many practitioners, while registered and able to transact, are taking a conservative stance and waiting for a signal that the industry as a whole is making the change before fully committing. Encouraging take‐up by requiring some additional documents to be lodged electronically will lead to a positive network effect that will benefit all participants including clients as the effectiveness and efficiency

• f the system can be fully realised.

• security and integrity of the titles register
• e-conveyancing has been proved to be reliable and effective
• accelerate take-up to allow the broader benefits to be realised sooner.
• digital disruption of conveyancing is now well underway and continuing at an

increasing pace

• phased implementation
• mortgages and discharge of mortgages – from 1 August 2017
• caveats and withdrawal of caveats – from 1 October 2017
• transfers – from 1 December 2017
• now is a good time to prepare for the next upswing in the WA property market.

I am sure you are all aware of my intention as the Registrar of Titles to require eligible documents to be lodged electronically through an electronic lodgement network in a phased implementation by December of this year. CIB 289 I would like to take this opportunity to reiterate why I believe this is needed now. The primary reason is the security and integrity of the Titles Register. Fraudsters are getting better and identity theft is now much more common. E‐conveyancing is a closed system and every person involved in a transaction can be positively identified and their actions tracked. This is not the case in paper. This makes e‐conveyancing a more robust and secure way to transact in land significantly reducing risk both on and off the Titles Register.

We have been doing e‐conveyancing in WA for nearly 2 years and it has proved to be reliable and effective. By accelerating take‐up, we have an opportunity to harness the network effect and realise the broader benefits of electronic conveyancing to the WA economy sooner remembering that this is a COAG initiative to deliver a national seamless economy. We are now seeing signs that the pace of this disruptive change to conveyancing is

• accelerating. For example:
• The banks are now moving quickly to integrate e‐conveyancing into their back end

processes

• Third party providers like SETTS+ are providing support in their products
• Other jurisdictions are now committing to specific timelines to go paperless.
• There are an increasing number of positive stories from clients being reported.
• There has been some interest from other organisations in becoming electronic

lodgement network operators. Building on what we have already done, our phased implementation allows momentum to be maintained whilst giving industry time to adjust.

• NSW, Victoria and SA have all announced timelines for their transition to paperless

conveyancing in 2018/19. Our eligible transfers will start flowing through the system in early 2018 slightly ahead of NSW. We can do this because we are a smaller, more agile jurisdiction and are well prepared for the change. The WA property market is currently lagging the eastern states particularly NSW and Vic. This will not be the case forever. We have a great opportunity to transition while transaction volumes are low in preparation for the next market upswing rather than trying to achieve this during a boom.

• eligible documents are limited to those that can be completed electronically today

(approximately 60% of all transactions)

• transfers over the whole of the land in a title involving all of the proprietors selling the

land with a consideration type that is able to be assessed by Revenue Online

• discharge of mortgage and mortgage documents including re-finances
• caveats, withdrawal of caveats
• common exclusions
• partial transfers
• transmissions and survivorships
• transactions not supported by Revenue Online
• private mortgages
• self-represented parties (sellers and purchasers)
• details are available on the Landgate website.

We have had a number of enquiries about what is an eligible transaction. As you are most likely aware not every transaction can be completed electronically at this time and not every person lodging documents can register with the electronic network

• perator.

Eligible documents are limited to those documents that can be completed electronically

• today. These relatively simple, high volume transfer, mortgage, discharge of mortgage

caveat and withdrawal of caveat transactions represent between 60% and 70% by volume of all of the transactions on the Register. . Getting these transactions completed electronically is the

focus This slide shows some of the common exclusions. Future developments of the system will support more transaction types as we go forward to 100% paperless conveyancing

More details are available on the e‐conveyancing page of our website or you can contact Landgate with your queries. As a philosophy, I would encourage you to look for opportunities to complete as many transactions electronically as you can rather than try to avoid them.

Registrar of Titles

• member of ARNECC to maintain

the national e-conveyancing legal framework

• interprets the legislation
• determines participation rules
• determines what transactions can

be completed electronically. Landgate

• maintains the titles register
• assist the industry through

transition. Industry associations, banks and practitioners

• manage business change
• reform internal processes
• deliver conveyancing services to clients
• training for members.

ELNO

• provides the electronic conveyancing

platform

• trains practitioners in how to operate the

system

• n-boards and manages subscribers.

The transaction to paperless conveyancing requires co‐ordinated effort by all the stakeholders My role as Registrar of Titles is to



Be a member of the Australian Registrars National Electronic Conveyancing Council (ARCC) to maintain the national e-conveyancing legal framework



Interpret the legislation



Establish and maintain the Participation rules, prepare guidance notes and ensure training is available



Determine what transactions can be completed electronically Landgate



Support the Registrar maintaining the Titles Register by providing resources and systems.



Assist the industry through transition Industry Associations, Banks and Practitioners



Manage business change



Reform internal processes



Deliver conveyancing services to clients



Conduct training for members ELNO (PEXA)



Provide the electronic conveyancing platform



Train practitioners in how to operate the system



On‐boards and manages subscribers

WA Industry forum

• Landgate, AICWA, Law Society of WA, PEXA, major banks and some minor banks
• works to address issues as they arise and seek to drive usage of electronic

conveyancing across industry. Training

• Landgate is in discussion with AICWA to assist in the conduct of national electronic

conveyancing accreditation training in WA

• PEXA provides a wide range of training resources online and in person eg. PEXA

Direct

• PEXA roadshow including visits to regional locations in May 2017
• ARNECC guidance notes
• we are available to assist with other training activities as required
• requests or queries to paperlessconveyancing@Landgate.wa.gov.au

So how is the industry being supported on our journey to paperless conveyancing? The WA Industry Forum is comprised of representatives from the Big 4 banks and some minor banks, AICWA, Law Society of WA, Landgate and PEXA. The focus of the group is to work to address issues as they arise and seek to drive usage of electronic conveyancing across industry. There is also a range of training initiatives available now or getting underway in the next few months. We are in discussion with AICWA to assist them in conducting national electronic conveyancing accreditation in WA. This is based on a very successful program that has been run in other jurisdictions. It is intended that the content will be specifically tailored to our local needs.

PEXA has been conducting training in the system for a number of years and have an excellent range of on‐line and face–to face training offerings. These include videos, guides, newsletters and an active on‐line community. I particularly draw your attention to their personal training approach known as PEXA Direct. PEXA Direct is free for subscribers. The program effectively guides subscribers through their initial electronic transfers enabling them to confidently transact on‐line. PEXA is arranging a PEXA roadshow including visits to regional locations in May 2017. There will representatives from Landgate at these sessions. There is also a range of other information available on line. For example, ARNECC has published a number of guidance notes on its website of interest to subscribers seeking information on the Participation Rules and Operating Requirements If you are legal practitioner or settlement agent and have yet to register as a subscriber on the electronic lodgement network I suggest you contact PEXA as soon as possible. There is no need to wait for training sessions to be conducted to start the on‐boarding process. My staff are also available to answer your specific queries or to assist with other training as

• required. Please contact us.

In terms of system training, PEXA has responsibility for that. PEXA has adopted a personal training approach known as PEXA Direct.

COAG agreement National Seamless Economy Inter-government agreement First e-conveyancing transaction M, DM Electronic Conveyancing National Law implemented in WA Functionality extended C, WC, T Landgate Registry System (NLR) VOI alignment VOI self-represented parties E-lodgement of stand-alone mortgage & discharge of mortgage E-lodgement of all eligible documents Additional transactions Survivorship, transmissions Change of name Remove Duplicate Certificate of Title Forms simplification Other transactions

As I have mentioned earlier, we are on a journey to 100% paperless conveyancing. In order to achieve this, we have a number of additional initiatives on our roadmap. These initiatives include:

• Additional Transactions for electronic lodgement – Survivorship, transmissions, change of

name.

• Remove Dup CTs from the land administration system.
• Forms simplification and rationalisation
• And continue to add additional transactions until we achieve 100% digital lodgement

capability.

• align VOI practices for paper transactions with the national standard for electronic

transactions

• improve the integrity of information on the register
• reduce the risk of fraud and improper dealings
• remove confusion for customers and agents operating in electronic and paper
• replace the existing Registrar’s and Commissioner’s Joint Practice.
• VOI has been extended to both purchaser and seller
• requirements align with WA participation rules where possible
• requirements issued May 2017
• three month optional use period to end of August 2017
• mandatory use from 1 September 2017
• self-represented party VOI statements will be issued by Australia Post from late

May 2017.

I would like now to discuss Verification of Identity Alignment It has been some time since I last spoke about the alignment of our commissioners’ and Registrars’ VOI practice with the VOI requirements in set out in the Participation Rules. The new Verification of Identity and Authority Requirements, closely aligned to Version 3.1

• f the WA Participations Rules for electronic transactions were drafted and released for

industry consultation in November/December 2015. The feedback we received was very positive. The project was then deferred due to legal complexity with the alignment. The aim is to replace the existing Registrars and Commissioners Joint Practice for verification of identity for paper transactions with new requirements that align as closely as possible with national VOI standard for electronic transactions. This will

• Improve the integrity of information on the Register

• Reduce the risk of fraud and improper dealings by ensuring all parties to

transactions are positively identified.

• Remove confusion for customers and agents operating in electronic and paper

Our timelines for the implementation of the new requirements are shown on the slide. So you can see we are looking to issue the new requirements in May 2017. But please note that we have included a 3‐month optional use period to allow time for industry to prepare and transition to the new requirements. During this time, you can start to use the new requirements at your discretion. Updated forms with the new certifications will be published during this period. It is intended that the use of the new requirements will be mandatory from the beginning of September These changes will also affect self‐represented parties. We are currently finalising an agreement with Australia Post which will see them taking responsibility for all aspects of verifying the identity of self‐represented parties including the preparation of the VOI Statement currently issued by Landgate. We anticipate these changes being in place by late May 2017 and will advise you of the changes to the VOI Statement closer to the date.

• Has the Registrar considered the competition implications of requiring

the electronic lodgement of documents?

• Why does it cost conveyancers more to do business electronically

when paper-free efficiency is about saving costs?

• What happens to Transfer transactions that are already underway on

1 December 2017? Do they need to be lodged electronically?

• The Joint Form General Conditions is being reviewed and updated.

Will the new forms be available in time for the change?

Before I take questions from the floor I would like to address some of the most common questions I have been asked since I indicated my intention to require documents to be lodged electronically.

• Q. Has the Registrar considered the competition implications of requiring the electronic

lodgement of documents?

• R. I have investigated and obtained legal advice on issues related to competition and I

am satisfied that the requirements for e‐conveyancing comply with Competition and Consumer Act 2010.

• Q. Why does it cost conveyancers more to do business electronically when paper‐free

efficiency is about saving costs?

• R. The savings will not be immediate. Evidence suggests that in a fully functioning

electronic market for property transactions there will be significant savings and

productivity gains. While we remain in a situation where all parties need to support both paper and electronic transactions it will be difficult to realise the full benefits. Electronic conveyancing offers its greatest benefits to West Australians when all parties participate. Accelerating the take‐up will reduce the overall cost to industry and government of maintaining concurrent paper and digital processes. Consumers can benefit from these savings

• Q. What happens to Transfer transactions that are already underway on 1 December

2017? Do they need to be lodged electronically?

• R. The Requirements only apply to conveyancing transactions commenced after 1
• December. All in‐flight transactions that have commenced prior to this date may be

lodged in paper form.

• Q. The Joint Form General Conditions is currently being reviewed and updated. Will the

new forms be available in time for the change?

• R. REIWA and the Law Society of WA are undertaking the review and the timing is a

matter for them. The existing Joint Form General Conditions includes an e‐ conveyancing appendix which remains suitable to use until the new form is finalised.

Contact: paperlessconveyancing@Landgate.wa.gov.au

Thank you.