on 28-10-2021 09:53 AM
I'm just wondering why it is so difficult for the banks to provide the funds available at settlement and whether they have an authority to draw additional funds from clients accounts at least a few days prior to settlement..... surely this is information that is available well before the actual date of settlement, which is when most banks provide it. Sometimes we need additional funds for settlement from our clients, which is virtually impossible to do on the day of settlement.
This also applies for payout figures.... when we were doing manual settlements the banks were required to provide payout figures 24 hours prior to settlement... why is that not the case now? What if there are insufficient funds at settlement and we require the balance from the agent?
Same complaints over and over I know, but I'm curious to know the answers!!!!
on 02-11-2021 12:00 PM
Great question and one that is asked regularly by members. Similarly, banks ask “why hasn’t the practitioner hit the “ready for shortfall” button?
It’s clear the process can be difficult as there are many dependent activities, and each case has it’s own set of “gotchas”. Here at PEXA we know the frustrations and have embarked on a project to improve on-time settlements across the industry. Our work so far, has identified some key points:
Amongst this landscape of interdependencies, there have been some additional challenges. The majors have been open with their struggles throughout the pandemic with short staffing, change in processes to support remote working, swift onshoring of teams, recruitment and training difficulties. It’s been a rough ride for the entire industry as transaction numbers soar in response to the pandemic and low interest rates.
Importantly, we have discovered that around 30% of transactions scheduled to settle on a given day, will not settle on that day. Often other parties to the transaction are not aware, resulting in wasted effort for those parties. PEXA has developed health indicators to let participants know when things are off track on the key elements of a settlement. New functionality will be available in our R15.0 to help with this and a trial in the jurisdiction of South Australia will commence shortly. Rest assured, the entire industry are working together to improve the settlement experience for everyone.
Hope this helps!