The verdict is out. The Personal Property Securities Act 2009 (Cth) (PPSA) needs to be reformed. Three years after the introduction of the PPSA, and following an extensive review of the Act that transformed secured transactions in Australia, support for a reform of the PPSA is evidently overwhelming.
The final report examining the impact of the PPSA has illustrated that the Act has not streamlined the regulation of security interests as intended. Instead, over 170 submissions from businesses, academics, industry and Governmental bodies have indicated that the PPSA and the Personal Property Security Register (PPSR) are daunting and complex – full of jargon and unfamiliar concepts. Further, general awareness of the PPSA appears to have remained low, particularly amongst small businesses.
The reform report indicated that the solution to these issues does not lie in any single step; rather, improvement needs to be implemented through many small changes. The final report suggested 394 recommendations to improve the PPSA and the PPSR. Some of the key recommendations include:
- simplifying the content of the PPSA, and reducing the number of decision points for users of the PPSR
- deleting unnecessary concepts, including all references to “chattel paper”, and the distinction between “commercial” and “consumer” property, for example
- reducing the PPSR’s 21 collateral classes to six classes, allowing a registration to be made against a number of collateral classes at the same time, and allowing a registration to be amended by varying the collateral classes over which the registration has been made (currently not permitted)
- repealing the Corporation Act 2001 (Cth) requirement that a security interest be registered on the PPSR within 20 business days (or risk vesting in the grantor upon the grantor’s insolvency)
- implementing a fresh education campaign supporting the (amended) PPSA
We are glad to see some recommendations beginning to make their way into the PPSA, with the first amendment (simplifying the definition of “PPS Lease” by removing the separate rule for serial- numbered-goods) coming into effect later next month