Conveyancing Rules and Verification of · PDF file• The digital revolution is here and is...
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Conveyancing Rules and Verification of Identity 14 June 2016
Transcript of Conveyancing Rules and Verification of · PDF file• The digital revolution is here and is...
Conveyancing Rules and Verification of Identity
14 June 2016
Agenda 9:30 Introduction Greg Channell
Director, Legal/Industry Engagement/Governance 9:35 Conveyancing Rules and VOI
10:10 Identity Agents
10.10 • ZipID Sean Simmons Head of ZipID
10:30 • IDSecure Mark Paholski Managing Director
10:50 • Australia Post Paul Tumminello Account Executive NSW
11:10 Q &A with all presenters
11.30 Close
Introduction Conveyancing Rules and Verification of Identity
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Conveyancing and Digital Transformation • The digital revolution is here and is ongoing
• It will change conveyancing in many ways, some we can see and others as yet unforeseen
• The challenge for every one in every sector of the property market is to find the opportunities and benefit from them
“We have to recognise that the disruption that we see driven by technology, the volatility in change is our friend if we are agile and smart enough to take advantage of it.” Malcom Turnbull
Some changes on the way
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Changes that will impact conveyancing:
• Priority Notices to be introduced in late 2016
• Uniform National Mortgage (April 2017) - other national Forms?
• 2016 edition Contract - Fed Govt issues – Foreign Resident Withholding provisions
– Foreign Ownership register - s47 land tax certificate changes
• Electronic contracts and Electronic Vendor Disclosure
• Electronic communications with client (PEXA SettleMe) • LPI scoping study
Presenter
Presentation Notes
Taxation Administration Amendment (Collection and Disclosure of Information to Commonwealth) Bill 2016
Introduction - Electronic Conveyancing Update
Conveyancing Rules and Verification of Identity
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EC Implementation in NSW
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Release 1 – 8 October 2013 - Mortgages and Discharges - Big 4 banks + others
Release 2 – 14 November 2014 - Transfers, Caveats & Withdrawals of Caveat - Representative Subscribers - Electronic settlement
Next - Alignment rollout 1st half 2016 - Priority Notices October 2016
Over 50,000 dealings lodged electronically Over 1,100 Subscribers signed up in NSW
Presenter
Presentation Notes
The first matter to commence will be imposition of the same Verification of Identity framework that currently applies to mortgagees and to electronic transactions being applied to conveyancing generally.
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e Dealing Lodgment Statistics to 3 June 2016 Total Release 1 Lodgments (DMs & Ms) 2923
R2 Dlg Type Totals:
DM: 25526 T: 368 M: 21270
WX: 213 X: 635
Total Release 2: 48012 Total e Lodgments 50935
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TOTAL SOLICITORS (NSW) 633
TOTAL CONVEYANCERS (NSW) 300
TOTAL SOLICITORS (VIC) 78
TOTAL CONVEYANCERS (VIC) 1
TOTAL SOLICITORS (QLD) 40
TOTAL SOLICITORS (ACT) 2
TOTAL SOLICITORS (WA) 5
TOTAL CONVEYANCERS (SA) 1
TOTAL SOLICITORS (SA) 3
TOTAL FIs 46
TOTAL SUBSCRIBERS IN NSW 1109
• Eliminates long interactions with banks to arrange settlement and physical attendance at settlement
• Eliminates gap (risk) between settlement and lodgment
• Immediate confirmation of lodgment • Earlier availability of cleared funds after
settlement • No need to physically lodge documents with LPI –
particularly useful for caveats • Easier access for rural and remote communities
Benefits of electronic conveyancing
Conveyancing Rules Conveyancing Rules and Verification of Identity
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Alignment of paper and electronic processes
Real Property Amendment (Electronic Conveyancing) Act 2015
The Registrar General may make conveyancing rules covering: • the verification of identity and authority, • client authorisations, • certifications to be given • retention of evidence Phasing out of CTs Priority Notices - Electronic only dealing
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Both electronic and paper conveyancing will continue in parallel for a while. But the process will become the same – • one process • one workflow, • one set of rules
Presenter
Presentation Notes
LPI released a Consultation paper in May 2014 entitled Conveyancing Reform - Concurrent Electronic and Paper Conveyancing. The premise of the paper was that Both electronic and paper conveyancing will continue in parallel for a while. However in consultation with industry it was clear that maintaining two parallel processes is a cost for industry and a disincentive to convert to electronic conveyancing. Accordingly, New South Wales and some other states worked on pro proposals to make changes to paper processes so that conveyancing could be one process one workflow, one set of rules This meant introducing some of the reforms developed for electronic conveyancing into paper conveyancing, including a standard verification of identity and authority framework. The proposals were well supported and LPI moved to put them into effect.
Conveyancing Rules • The Real Property Amendment (Electronic
Conveyancing) Act 2015 introduced a new section 12E into the Real Property Act 1900 which allows the Registrar General to make Conveyancing Rules.
• Alignment provisions in the Conveyancing Rules will largely parallel provisions in the Participation Rules for electronic conveyancing.
• The Rules will align paper conveyancing practices and workflows with those developed for electronic conveyancing and will be implemented in stages.
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Presenter
Presentation Notes
The mechanism used to provide the legal basis for these reforms was the Real Property Amendment (Electronic Conveyancing) Act 2015 This legislation which is now mostly commenced introduced number of new provisions into the Real Property Act 1900 but perhaps the most significant is section 12E which allows the Registrar General to make Conveyancing Rules. These Rules will be the vehicle for introducing Alignment provisions in Conveyancing and those parts of the Rules will largely parallel provisions in the Participation Rules for electronic conveyancing. The Rules will align paper conveyancing practices and workflows with those developed for electronic conveyancing and will be implemented in stages. The most significant change to come will be the ability to utilise Client Authorisations in Paper documents, signing them on behalf of clients. This will be subject to providing the same certifications as in ec on paper dealings. Don’t have a target date as yet as we are assessing the requirements for changing all forms. The Un-commenced part of the Act will commence on 1 October this year and introduces provisions related to introduction of priority notices.
Conveyancing Rules Real Property Act • Section 12E - The Registrar-General may make conveyancing
rules covering, for example,
– verification of identity and authority,
– client authorisations,
– the retention of documents and evidence
– classes of documents that must be lodged electronically
• The Registrar-General may refuse to accept or register, or may reject, a conveyancing transaction that does not comply with the requirements of the conveyancing rules [s. 12E (9)]
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Presenter
Presentation Notes
Section 12E - empowers The Registrar-General to may make conveyancing rules covering, for example, verification of identity and authority, client authorisations, the retention of documents and evidence classes of documents that must be lodged electronically, for example, when they are introduced later this year priority notices will only be up to be lodged electronically. Section 12E (8) provides that A person lodging a paper document giving effect to a conveyancing transaction must comply with the conveyancing rules. And Subsection 9 provides that The Registrar-General may refuse to accept or register, or may reject, a conveyancing transaction that does not comply with the requirements of those rules. Just a note about interpretation. In the PRs and CRs a Representative is you, a conveyancing professional who can represent a client in a transaction. A Client Agent is any agent of the client, for example an authorised officer of a body corporate or an Attorney under a registered Power of Attorney
Verification of Identity (VOI) Rules
Conveyancing Rules and Verification of Identity
Conveyancing Rules Section 12E (1)(a) Verification of Identity and Authority • the standards to which identity and authority are to be
verified,
• the classes of persons whose identity and authority is to be verified,
• the classes of paper documents to which verification of identity and authority requirements apply,
• who can undertake verification of identity and authority, and
• any supporting evidence and retention requirements
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Presenter
Presentation Notes
Section 12E (1)(a) provides for Verification of Identity and Authority and allows the RG to make rules about the standards to which identity and authority are to be verified, the classes of persons whose identity and authority is to be verified, the classes of paper documents to which verification of identity and authority requirements apply, who can undertake verification of identity and authority, and any supporting evidence and retention requirements
VOI - Current Situation
• Formal VOI requirements currently apply for: – mortgagees to identify the mortgagor – s 56C
Real Property (RP) Act – attesting witnesses – s 117 RP Act – electronic transactions - Rule 6.5 NSW
Participation Rules
• Due diligence requirement to know client
Presenter
Presentation Notes
“In the majority of mortgage-related cases seen at LawCover where the underlying transaction involves fraud, the success of the fraud is often due to the solicitor's negligence. The solicitor becomes an unwitting accomplice or victim, and the subsequent claim made against the practitioner often has merit. In this way the client frequently suffers both at the hands of the fraudster and through the negligence of the solicitor. In many situations the latter is effectively the gatekeeper - but for the solicitor's neglect or oversight, the fraud might not have succeeded.” Peter Driessen at the time Chief Claims Solicitor and now General Counsel at LawCover Lock the gates against fraud Law Society Journal Dec 2009 CHANDRA & ANOR v PERPETUAL TRUSTEES VICTORIA LTD & ORS [2007] NSWSC 694
VOI - Conveyancing Rules • Version 1 commenced 1 May 2016, transition period
of 3 months before full compliance required on 1 August 2016
• Verification of Identity (VOI) requirements • Reasonable steps • Identity Agents • VOI Standard (Sch 8 Participation Rules)
• Verification of Authority (right to deal) • Retention of evidence • Guidance notes on www.arnecc.gov.au
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Presenter
Presentation Notes
VOI - Conveyancing Rules
• Apply to solicitors and conveyancers
• Formal (standardised) Verification of Identity (VOI) requirements for all conveyancing transactions
• Consistent national requirements across paper and electronic
Presenter
Presentation Notes
The proposal is to standardise formal verification of identity requirements for conveyancing purposes. This means the rules will be standardised across the existing formal arrangements, and the current changes are the final implementation replacing informal due diligence obligations for conveyancing professionals with the same formal requirements that already apply to ec and mortgagees Not only will be requirements the standard across conveyancing applications but it will be standard across paper and electronic transactions and eventually standard nationally.
VOI - Conveyancing Rules
Rationale • Significant fraud mitigation and consumer
protection measure • Applying consistent requirements in all
paper and electronic conveyancing transactions
Presenter
Presentation Notes
Identity fraud is certainly a significant concern in conveyancing as well as other areas. Formal VOI requirements are already applied to mortgagees, attesting witnesses, and electronic transactions Intention is that the same verification of identity framework will apply in all conveyancing situations and eventually through ec and alignment initiatives VOI will replace attestation This will avoid confusion and possible errors where different regimes apply different circumstances.
VOI - Conveyancing Rules What is required? You must take reasonable steps to:
• verify the identity of your client [R 4.1.2] either by: – applying the VOI Standard
– or in some other way that constitutes reasonable steps [R 4.1.3]
and
• ensure the client is a legal person and has the right to enter into the transaction [R4.3.2]
• Note
– Compliance with the National VOI Standard at Schedule 8 Participation Rules is taking reasonable steps but -
– Further steps may be required – not just ticking the box
Presenter
Presentation Notes
It’s a quite simple and flexible requirement, you must take reasonable steps to verify the identity of your client. Really as I mentioned before, taking reasonable steps to identify the client to identify the client is something that should be being done by all solicitors and conveyancers now as part of the normal due diligence. The reasonable steps regime allows practitioners the flexibility to adapt to different circumstances. If you have acted for a client in many transactions over many years you would be unlikely to decide to apply the verification of identity standard. However, that standard is available for solicitors to follow, where they elect to do so, , to provide some certainty about compliance. You will have to exercise professional judgement about what is appropriate in different circumstances. And remember that in a particular risky scenario or where there is an issue with one of the forms of identification provided you may need to go beyond the steps outlined in the standard.
VOI - Conveyancing Rules When are further checks required?
[R 4.1.4] • Where you know or ought reasonably to know that:
• any identity Document produced by the Person Being Identified is not genuine; or
• any photograph on an identity Document is not a reasonable likeness of the Person Being Identified
• the Person Being Identified and/or the Identity Declarant does not appear to be the Person to which the identity Document(s) relate;
• it would otherwise be reasonable to do so.
VOI - Conveyancing Rules The VOI Standard • SCHEDULE 8 – NSW Participation Rules • Published on LPI website – adopted
National model Rules • Standard applies to electronic
conveyancing • Mortgagee requirements under s 56C • Now to conveyancing practitioners
VOI - Conveyancing Rules The VOI Standard • Requires face-to-face in-person interview
• Hierarchy of ID documents, highest possible category must be used
• Documents must be current (except Passport < 2 years old)
• Where Documents contain photographs the Identity Verifier must be satisfied that the Person Being Identified is a reasonable likeness (for example the shape of his or her mouth, nose, eyes and the position of his or her cheek bones) to the Person depicted in those photographs
VOI - Conveyancing Rules What if you can’t meet the VOI Standard • Take Reasonable steps
• If your client doesn’t have full documents consider Category 5 an Identifier declaration essentially a referee
• Do what you are able to do – if you have done all you can it can hardly be considered that you have been unreasonable
VOI - Conveyancing Rules The ARNECC Guidance Notes ARNECC has published 5 Guidance Notes so far.
• MPR Guidance Note #2 – Verification of Identity (Updated)
• MPR Guidance Note #4 – Right to Deal
• MPR Guidance Note #5 – Retention of Evidence
While these relate to the Participation Rules they are equally relevant to the Conveyancing Rules
Presenter
Presentation Notes
ARNECC publishes Guidance Notes based on its Model Participation Rules (MPR) to assist Subscribers in understanding what is expected of them in complying with the Registrar’s Participation Rules in each jurisdiction. The following are the latest published MPR Guidance Notes. The Version Number indicates the version of the MPR that the Guidance Notes are aligned with. �Published Version 3 MPR Guidance Note #2 – Verification of Identity (Updated)This Guidance Note provides advice and assistance to Subscribers and mortgage lenders on verifying the identity of a transacting party in a conveyancing transaction in accordance with the Version 3 Model Participation Rules. It has been updated to include advice on using an Australian Embassy/High Commission/Consulate to verify the identity of an Australian or foreign national overseas. MPR Guidance Note #4 – Right to Deal This Guidance Note provides advice and assistance to Subscribers on determining the right of a transacting party to enter into a conveyancing transaction in accordance with the Version 3 Model Participation Rules. Also relevant is MPR Guidance Note #5 – Retention of Evidence This Guidance Note provides advice and assistance to Subscribers on retaining evidence to support conveyancing transactions in accordance with the Version 3 Model Participation Rules.
VOI - Conveyancing Rules Options for conducting VOI:
• Do it yourself
• Use an Identity Agent – ZipID
– IDSecure
– Australia Post
Presenter
Presentation Notes
So what are the options for conducting VOI. Do it yourself Use it as an opportunity to establish a good relationship with your client. If you do there are a number of software packages that can assist you. And you will hear about a few of them in a moment. There are other options on the market including a product called Idfy by Infotrack and there is a link at the end of this presentation. So you can conduct the Voi yourself or you can Use an Identity Agent. Identity Agents are persons or entities that hold the required minimum levels of insurance set out in the above mentioned Rules and Requirements and that are considered by the Subscriber, mortgagee or ELNO engaging them to be reputable and competent. ARNECC does not approve Identity Agents nor in any way assess their reputation or competence or approve of the way they provide their services, including whether the services comply with the above mentioned Rules and Requirements. Australia Post Services are provided at selected post offices. IDSecure Pty Ltd Services are provided by visiting the person whose identity is to be verified.�ZipID Pty Ltd Services are provided by visiting the person whose identity is to be verified. We are fortunate today to have representatives of these three organisations to discuss their service with you.
Links Identity Agents Australia Post • http://auspost.com.au/travel-id/buying-or-selling-property.html
IDSecure Pty Ltd • http://www.idsecure.com.au/
ZipID Pty Ltd • https://zipid.com.au/
Software provider Infotrack • https://www.infotrack.com.au/products/disruptive-technology/idfy-voi/
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Additional Information • Conveyancing Rules
http://www.lpi.nsw.gov.au/__data/assets/pdf_file/0016/209410/NSW_Conveyancing_Rules.pdf
• Participation Rules http://www.lpi.nsw.gov.au/__data/assets/pdf_file/0017/206504/NSW_Participation_Rules_Version_3.pdf
• ARNECC Guidance Notes http://www.arnecc.gov.au/publications/mpr_guidance_notes
• www.lpi.nsw.gov.au/about_lpi/national_e-conveyancing_nsw
• Sign up to newsletter, inquiries [email protected]
• ARNECC http://www.arnecc.gov.au/
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