New South Wales Review of the Conveyancers Licensing Act 1995

National Competition Policy Review and statutory review under section 95 of the Conveyancers Licensing Act 1995 Final Report DEPARTMENT OF FAIR TRADING NSW Consumer Protection Agency Table of Contents 1. EXECUTIVE SUMMARY AND RECOMMENDATIONS ..................................... 1 Background to the Review........................................................................................... I The regulation of Conveyancers.................................................................................. I The Act's objectives .................................................................................................... 1 Justification for government interventim .................................................................... 2 Effects of the licensing regime on competition ........................................................... 3 Evaluation of the net public benefit ofthe current regime .......................................... 3 Alternate regulatory options ........................................................................................ 4 Conclusions .................................................................................. ,................... .. ......... 5 RecolIllllCndations ....................................................................................................... 6 2. BACKGROUND TO THE REViEW ................................................................... 10 National Competition Policy and statutory review obligations ........................ ,........ 10 Marketfailure and consumer protection ........................................................... /1 The review process ............................................................................................... ,.... 12 The Final Report ........................................................................................................ 13 3. THE CONVEYANCING INDUSTRY IN NSW ......•....•...••.•......................••........ 15 The size of the industry ............................................................................................. 15 Role ofa licensed conveyancer ................................................................................. 16 Range of work ........................................................................................................... 17 Businesses employing licensed conveyancers ........................................................... 18 Location ofbusincsscs employing licensed conveyancers ........................................ 20 Fees for conveyancing services ................................................................................. 21 4. THE REGULATION OF CONVEyANCERS •...•.......................................•......•.. 24 History of the regulation of conveyancers in NSW ................................................... 24 The Conveyancers LicQ1sing Act 1995 ..................................................................... 25 Main Featrlresofthe Licensing Scheme ........................................................... 25 Other Legislation ....................................................................................................... 31 The Fair Trading Act and the Consumer Claims Act ........................................ 31 The Legal ProfeSSion Act .................................................................................. 3 J The Property, Stock and Business Agents Act................................................... 32 The industry associations ........................................................................................... 32 Industry regulation in other jurisdictions ................................................................... 32 5. OBJECTIVES OF GOVERNMENT INTERVENTION ..............................•......•..• 34 Government intervention in the conveyancing industry ............................................ 34 Regulatory objectives of governmen!... ..................................................................... 34 Can Government intervention be justified? ............................................................... 37 The need for intervention in the provision of conveyancing services ....................... 38 Conclusion ................................................................................................................. 4 t 6. EFFECTS OF THE LICENSING REGIME ON COMPETITION ......••................... 42 Objectives of the licensing regime ............................................................................ 42 Impact of the legislation on competition ................................................................... 42 Restrictions on entry into or exit from the markeL ................................... ,...... , 44 Restrictions on the types o/work undertaken .................................................... 46 Restrictions on business structures .......................................................... '.' ...... 47 Restrictions on the way the business is operated .............................................. 48 Restrictions on interstate applicants ................................................................. 48 Submissions ....................................................................................................... 49 7. COSTS AND BENEFITS OF THE ACT... .........................................•................. 52 Costs and benefits and NCPreview requirements ..................................................... 52 Assessing the costs and benefits of the Act ............................................................... 53 Costs................................................. ................................................................. 53 Benefits................................................ .............................................................. 55 Evaluation of net public benefit or cost ..................................................................... 56 8. ALTERNATIVE LICENSING ARRANGEMENTS ................•...........••...............•. 59 Option 1 Business Licensing ..................................................................................... 59 Option 2 Negative Licensing ..................................................................................... 61 Option 3 Co· Regulation ............................................................................................ 63 Option 4 Remove regulation ..................................................................................... 65 Submissions ............................................................................................................... 67 Conclusions ............................................................................................................... 68 9. EVALUATING THE COSTS AND BENEFITS OF CURRENT LEGISLATIVE REQUIREMENTS ..•......••....•............................................................................. 70 Market Boundary Issues ............................................................................................ 70 Licensing Issues ......................................................................................................... 73 Application process and disqualified persons................................................... 73 Educational and pructical experience requirements ......................................... 75 Continuing Professional Development ............................................................. 77 Professional indemnity insurance and contributing to the fidelity fund ........... 79 Regulating business behaviour .................................................................................. 81 Trust accounting ............................................................................................... 81 "Rules" jor conveyancers ................................................................................. 82 Multi disciplinalY practices .............................................................................. 84 Disciplinary process .................................................................................................. 86 Complaint and disciplinary procedures ............................................................ 86 Penalties ............................................................................................................ 96 Penalty notices .................................................................................................. 97 Unlicensed operators ........................................................................................ 98 Receivers and Managers ................................................................................... 99 APPENDIX A ....................................................................................................... 100 Terms of Reference ................................................................................................. 100 APPENDIX B........................................................................................................ 101 Submissions to the Review...................................................................................... 101 APPENDIX C .••.••................................................................................................. 102 ii 1. Executive Summary and recommendations Background to the Review The review has been undertaken as part of the NSW Government's commitment under the National Competition Policy to review all of its legislation wruch potentially restricts competition. The National Competition

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