Mackay Townsville Cairns 28 th 30 th of

Mackay, Townsville & Cairns 28 th – 30 th of August 2018

Ian Hendey Chief Practitioner Services Officer, PEXA Update

How is PEXA’s platform transforming the industry

PEXA’s platform is transforming the industry

PEXA Snapshot as of August 2018 Over $175 billion ~7, 032 worth of property value settled Practitioner Firms Registered Australia-wide Over 1, 300, 000 Property transactions completed ~150 Financial Institutions Australia -wide 5 © Property Exchange Australia Limited (PEXA) 2017. 50%+ of all lodgements are digital via PEXA nationally

PEXA’s operational infrastructure to Support the Network 6

Support available in your area • PEXA Direct Specialists/Virtual Specialists: Morvanna Jones depending on region Phone: 0499 555 439 Email: Morvanna. jones@pexa. com. au • Community: Sign up at community. pexa. com. au • PEXA Support Centre: 1300 084 515 7

Jess Caire Market Specialist (QLD) , PEXA Purposeful Planning

BUILDING ORGANISATION READINESS CHANGE PLANNING CONSIDERATIONS Identify – who and what? Assess – the three P’s Implement 9 © Property Exchange Australia Limited (PEXA) 2017. • The processes that will need modifying • And people who will be completing the processes • Impact Assessments on existing policies, procedures and people • Risk assessment • Implement the changes from top down – communicate the WHY behind the change • Understand empathise with change behaviour • Complete all appropriate training • Change SOP’s and policies in house REVIEW OFTEN ü For effectiveness ü For required changes to processes further ü For quality checks and adherence to new system

ARNECC – the e-Conveyancing bible REFER TO ARNECC GUIDANCE NOTES Put Your Text Here To implement process changes and ensure risk mitigation Refer: https: //www. arnecc. gov. au/publication s/mpr_guidance_notes 10 © Property Exchange Australia Limited (PEXA) 2017.

Your people and the MPR requirements 11 © Property Exchange Australia Limited (PEXA) 2017.

MPR - THINGS TO CONSIDER MPR REFERENCES ACTIONS TO TAKE TO ENSURE YOU COMPLY QUESTIONS TO ASK You must ensure user compliance ü ü ü Users have read and are aware of the MPR Appropriate time has been invested in training Training has been undertaken by all involved ü ü What training have you arranged? How will it be recorded? Who will do the training? How will you ensure the MPR has been read? Details of the ELNO are always complete and up to date ü Implement a system to ensure that all details are correct at all times Onboarding and offboarding system for new & exiting staff ü ü How often will we check details are correct? Is there a system for the Subscriber Administrator to flag a change in your business? You must ensure the authority of each person entering into a Client Authorisation – this is your client’s instructions to you so that you can sign an instrument on their behalf and you can transact electronically You must consider their right to deal – take extra steps – collect copies of rates notices You must verify the client is who they say they are – ID is required ü How will this impact the way in which you engage your clients? What is your process if CAF isn’t signed in front of you? How will you capture additional data – right to deal & ID? What internal process will you implement to ensure reasonable steps? ü Must comply with the Client Authorisation and act within its terms ü ü ü Must take reasonable steps to ensure that all of the ü information provided to the Subscriber by any other Subscriber, any Client, the Registrar or by the ELNO is protected from unauthorised use, reproduction or disclosure 12 © Property Exchange Australia Limited (PEXA) 2017. ü ü ü Ensure that IT security policies that protect access ü to the ELNO are implemented – password ü security, network access, laptop security etc ü ü What IT security is implemented? How are you collecting and storing data (VOI) How is your system protected? (email / server etc) Have you had an independent audit?

Your responsibility as the Subscriber Administrator under the MPR requirements 13 © Property Exchange Australia Limited (PEXA) 2017.

Your Responsibility under the MPR 1 2 Ensure that all user details are up to date in the system Ensure all of staff members authorised to use PEXA are compliant and have the right authority 5 14 © Property Exchange Australia Limited (PEXA) 2017. 3 4 Maintenance of the Digital Certificates Issued – renewal of expired/replacement/lost or stolen First contact point for issues detected by the ELNO and/or the Registrar Notification of any unauthorised use to the ELNO and/or the Registrar

Signing on the digital line 15 © Property Exchange Australia Limited (PEXA) 2017.

Who can sign? • Qualifications required to digitally sign on the platform are determined by Queensland Law Society/Legal Services Commission • Qualifications required to digitally sign financial settlement statements are dictated by rules around trust account management (must also be an employee with signing right on the trust account with the bank) • Qualifications required to digitally sign documents for lodgement are Australian Legal Practitioner (includes Locums, Contractors & Interstate Lawyers) 16 © Property Exchange Australia Limited (PEXA) 2017.

General users – support staff, conveyancers, paralegals • Staff will be required to access the platform – to maintain and manage day to day contact with other parties and the clients in a transaction • They access the ELNO to enter data, invite participants, enter and update financials as well as manage the workspace • Refer to MPR requirements – are they sufficiently trained and aware of the obligations? • Consider the processes around reporting issues and/or misuse? 17 © Property Exchange Australia Limited (PEXA) 2017.

What am I certifying? 18 © Property Exchange Australia Limited (PEXA) 2017.

IDENTITY AUTHORITY The Certifier has taken reasonable steps to verify the identity of the Transferor/Transferee The Certifier holds a properly completed CAF for the transaction EVIDENCE The Certifier has retained the evidence supporting this Instrument or Document 19 © Property Exchange Australia Limited (PEXA) 2017. CORRECTNESS The Certifier has taken reasonable steps to ensure that this dealing is correct and compliant with the relevant legislation

1. Your client’s identity (VOI) The Certifier has taken reasonable steps to verify the identity of the Transferor/Transferee 20 © Property Exchange Australia Limited (PEXA) 2017.

Subscriber Compliance – Identity Verification of Identity – Evidence that the VOI Standard in Sch 8 of the Participation Rules was carried out or evidence of reasonable steps – No formal VOI requirements in QLD – (excluding Section 11 A of the Land Title Act 1994 and s. 288 A of the Land Act 1994 place an onus on ALL mortgagees) – Significant fraud mitigation and consumer protection measure – Consistent national requirements – ARNECC MPR Guidance Note 2 21 © Property Exchange Australia Limited (PEXA) 2017.

QLS – Guidelines for E-Conveyancing 22 © Property Exchange Australia Limited (PEXA) 2017.

2. 5. 5 Managing transactional risks Electronic settlement using PEXA requires changes to current conveyancing practice. In particular solicitors will be required to take reasonable steps to verify the identity of their client and will be authorised to sign transfer documents and direct the payment of purchase money at settlement. Solicitors should consider how the necessary changes in conveyancing practice will be managed, including verification of identity of clients, notifications within the PEXA system or a workspace related to a transaction, new time limits for undertaking tasks, liability for stamp duty, checking for data entry mistakes, confirming accuracy of certifications at the time of signing instruments and ensuring compliance with time limits for exercising client rights prior to settlement. A summary of issues a law practice should give consideration to appear below and are expanded further where relevant in the Transaction Guidelines. a. Client authorisations and Verification of Identity A solicitor must obtain a Client Authorisation (see [3. 1]) prior to signing a document (except for a settlement notice and caveat) in PEXA. Prior to or at the time of obtaining a Client Authorisation, the solicitor must take reasonable steps to verify the identity of their client (QPR, clause 6. 5. 1). The Verification of Identity (VOI) Standard published by ARNECC Schedule 7 requires a face to face verification of identity and the production of certain original identity documents. A solicitor who complies with the VOI standard will be deemed to have taken reasonable steps in accordance with the QPR, clause 6. 5. 1. Compliance with the VOI Standard is not compulsory and solicitors will need to assess the risk of non-compliance in each case where the client is unable to provide appropriate identity documents or a face to face meeting is not possible. It may still be possible to take reasonable steps to identify the client even though the VOI Standard is not satisfied. (QPR, clause 6. 5. 2). Refer also to [3. 2]. A solicitor should note the obligation to undertake further investigation beyond the VOI Standard if an identity document is not genuine or a photograph is not a reasonable likeness or the person does not appear to be the person in the identity documents. (QPR, clause 6. 5. 3). 23 © Property Exchange Australia Limited (PEXA) 2017. QLS e-Conveyancing Guidelines – CAF & VOI REFERENCE Refer Page 10 of guide Refer to Electronic Conveyancing National Law(Queensland) 2013

Subscriber Compliance Right to deal Entitlement of a person to be a party to a conveyancing transaction – Possession of CT, rates notice, contract – Ensure client is a legal person or entity (not, for example, a superannuation fund) – ARNECC MPR Guidance Note 4 24 © Property Exchange Australia Limited (PEXA) 2017.

What if you can’t meet the VOI Standard? Take ‘reasonable steps’: • You have to judge what is reasonable in the particular circumstances • If your client doesn’t have full documents consider an Identifier declaration, essentially a referee • Do what you are able to do – if you have done all you can and you are satisfied, in the circumstances, you are likely to be acting reasonably. Options for conducting VOI: 25 • Do it yourself • Use an Identity Agent • IDSecure • Australia Post • Zip ID © Property Exchange Australia Limited (PEXA) 2017.

2. That you hold the appropriate authority The Certifier holds a completed Client Authorisation for the conveyancing transaction including this Registry Instrument or Document. 26 © Property Exchange Australia Limited (PEXA) 2017.

Subscriber Compliance Client Authorisations – Ensure all fields are completed – Attach terms and conditions – ARNECC MPR Guidance Note 1 27 © Property Exchange Australia Limited (PEXA) 2017.

3. That you hold the appropriate evidence The Certifier has retained the evidence supporting this Registry Instrument or Document. 29 © Property Exchange Australia Limited (PEXA) 2017.

Question Answer Supporting Evidence Do you have all of the appropriate documents supporting stamp duty concessions or other items certified in the conveyancing transaction? Yes/No This is dependent on what the nature of the transaction is. Are they in order and retained for future examination in need? Yes/No 30 © Property Exchange Australia Limited (PEXA) 2017.

4. The correctness of what you have prepared The Certifier has taken reasonable steps to ensure that this Registry Instrument or Document is correct and compliant with relevant legislation and any Prescribed Requirement 31 © Property Exchange Australia Limited (PEXA) 2017.

Process Changes – Lexon first point of call Examples – refer to hand book 32 © Property Exchange Australia Limited (PEXA) 2017.

PAPER VS PEXA – WHAT CHANGES IN THE PROCESS? Meet Jenny – Property Lawyer ACTION PAPER PEXA ROLE BOB NOT IN PEXA REVIEW CONTRACT JENNY NOT IN PEXA ADVICE ON CONTRACT JENNY NOT IN PEXA CONTRACT CONDITIONS JENNY NOT IN PEXA DRAFT TRANSFERS BOB USER DRAFT PRIORITY NOTICE BOB USER REVIEW, SEND & SIGN TRANSFERS JENNY SIGNER REVIEW, SEND & LODGE PRIORITY NOTICE JENNY SIGNER BOOKING SETTLEMENT BOB USER CHECK TITLE SEARCH BOB PEXA JENNY SIGNER BOB JENNY SIGNER OPEN FILE SIGN OFF ON SETTLEMENT STATEMENT & CHEQUES SIGN OFF ON SETTLEMENT INSTRUCTIONS 33 Meet Bob – her Conveyancing Assistant © Property Exchange Australia Limited (PEXA) 2017.

File Opening Check List File opening checklist to create workflow Risk Management 34 © Property Exchange Australia Limited (PEXA) 2017. • Outlines step by step process to follow, captures data at a high level view • Checklist to be integrated with OS so and updated by all staff who work on file • Hard copy files to have hard copy checklist • Digi files to have digi copies saved in system PROCESS POLICY

Initial Engagement Letter Initial Engagement letter Risk Management 35 © Property Exchange Australia Limited (PEXA) 2017. • Now refers to the CAF, PEXA & ID • All client to be ID’d in house using ID App and Right to deal docs saved to electronic file –CAF to be signed in house at same time as ID gathered • All clients out of office must use ID Agent and have CAF signed by ID Agent PROCESS POLICY

ID / Right to deal checklist Collection of ID Risk Management 36 © Property Exchange Australia Limited (PEXA) 2017. • You will now record the Client ID Interview • All inhouse ID is gathered and stored on APP and the checklist is completed by the staff member who captured ID and any additional notes made. • Right to deal is collected at same time PROCESS POLICY

Opening and using the workspace Identify who will work in the workspace Risk Management 37 © Property Exchange Australia Limited (PEXA) 2017. • Workspace to be opened and invitations sent open file receipt • Refer to Community to create SOP • When will you sign off • Who will double check figures • Who will sign off and when • Identify which roles are allocated to which staff and ensure stop checks in place • Consider policy when a staff member leaves – removal and change of passwords PROCESS POLICY

Sharing of Bank Account Info 38 Bank Account Collection and Sharing • You will no longer email your Trust Account or ask for clients to email their bank account to you • All clients are called to double check account details • Bank Account details are asked for at time of engagement and checked closer to settlement Risk Management • Email footers are updated with warning and you notify clients in correspondence you will not send /request bank info via email • Phone call prior to any funds moving to confirm • Where possible bank advance full proceeds /collect full proceeds © Property Exchange Australia Limited (PEXA) 2017. PROCESS POLICY

OSR Connect Stamping Process 39 OSR Stamping will change for e. Conveyancing • Refer to hand out to see process in PEXA Risk Management • Identify the staff that are to stamp and the guidelines they are to follow © Property Exchange Australia Limited (PEXA) 2017. PROCESS POLICY

Bill Hourigan Queensland Law Society Your trust account and PEXA - Video

Marijana Markovic Executive Manager – Financial Institutions, PEXA Matt Kerr Lead - Digital Settlements, National Australia Bank Financial Institution Update

Financial Institutions Summary • 150 Financial Institutions Australia-wide registered with PEXA • Financial Institutions are Integrated; Workflow and Payment Integration • The industry working together to ensure an efficient digital process • Familiarise yourselves with the Industry Guidelines

PEXA Process Overview ü Fast access to cleared funds with electronic settlement ü Safe encrypted signing and funds exchanged via the RBA ü Efficient settlement with realtime lodgement of documents

Collaboration within the workspace

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