ARNECC has released Version 3 of the Participation Rules. These rules are critical to mortgagees’ VOI procedures.
The Australian Registrars National Electronic Conveyancing Council (ARNECC) is responsible for setting Model Participation Rules for the operation of electronic conveyancing. Version 3 can be accessed here.
Version 3 applies from in respect of all PEXA transactions in all jurisdictions and will apply to paper dealings in NSW, Victoria, SA, WA, and Queensland from a date to be announced expected to be the second week in November 2015.
Like the current Version 2, the Version 3 provides that mortgagees can use any reasonable method to conduct VOI. However, the procedures for ‘safe harbour’ have changed.
Click here to view the table.
There are other changes to the Participation Rules which assist the move to wholly electronic mortgages.
Mortgage brokers acting as Identity Agents
Version 3 provides that mortgage brokers are authorised to act as Identity Agents and conduct VOI within safe harbour. Mortgage brokers must satisfy the following criteria.
- May only verify the identity of mortgagors to whom a credit service is being provided (and not sellers or buyers). The credit service can relate to credit regulated by the National Credit Code or unregulated credit.
- Must hold insurance that includes cover for the conduct of verification of identity and comprises either:
- professional indemnity insurance and fidelity insurance, or
- professional indemnity insurance which provides coverage for third party claims arising from dishonest and fraudulent acts.
- Must be a natural person who is either:
- the holder of an Australian Credit Licence; or
- a director or an employee of the holder of an Australian Credit Licence or of a related body corporate of a holder of an Australian Credit Licence engaging in credit activities on behalf of that licensee; or
- a credit representative of the holder of an Australian Credit Licence.
What should mortgagees do?
Mortgagees need to review their VOI processes in anticipation of the new rules commencing. A fundamental question is whether mortgagees will insist on ‘safe harbour’ or will adopt some other reasonable method.
Combining the AML/CTF process with VOI in an efficient seamless activity can help on-boarding and reduce costs.