This is the second of Kott Gunning's "PPS eh?"
updates regarding the statutory review of the Personal Property
Securities Act 2009 (Cth) (PPSA or
On 4 April 2014 the Attorney General announced that the
Government will undertake a review into the PPSA. Following a
consultation process, the interim report was submitted to the
Government on 31 July 2014 and made publicly available on 15 August
A final report is due on 30 January 2015.
Proposals for change
Submissions were invited in relation to (a) issues peculiar to
small businesses and (b) all other issues. The PPS Review
Secretariat received 37 submissions prior to the closing date of 6
From the interim report, it seems that submissions fell,
broadly, into the following categories:
those that argued in favour of removing particular business
activities from the ambit of the PPSA;
those that sought to limit the impact the PPSA has on
those that sought to improve and simplify the PPS Register;
those that sought to address the complexities of the PPSA
The interim report laments that "the submissions
demonstrate...that the Act is more complex than it needs to
be" and that the Act will "never be an 'easy
read'" and will "always be complex". Indeed the
word "complex" is used 67 times in the interim
...so we need more submissions
Despite acknowledging the "considerable merit" of many
of the proposals for change that were submitted, the PPS Review
Secretariat declined to make any specific recommendations to the
PPSA, the Regulations or the operation of PPS Register at this
stage. Instead, a series of supplemental consultation papers on the
PPSA will be prepared and released to "identify and discuss
potential areas for reform as raised in the submissions, and
suggest other opportunities to simplify or clarify the operation of
the Act or to attune it more closely to the Australian business
environment". These supplemental consultation papers will be
released with a view to "broadening and deepening
understanding of the Act and the policies that underpin it, and to
inform the recommendations in the final report."
A list of topics that might be covered by the supplemental
consultation papers is set out in Annexure B to the interim report
transactions to which the PPSA applies;
creation of a security interest;
modes of perfection;
dealings in collateral;
enforcement of a security interest;
peculiar types of collateral;
interaction with the Corporations Act (circulating assets and
section 588FL); and
other provisions (sections 275, 339 and 343).
The interim report sets out (at Annexure C of the report) a set
of criteria that the PPS Review Secretariat proposes to take into
account in considering any proposed amendments to the PPSA. These
criteria are, broadly, as follows:
the overall objective of the Act;
the need to seek a balance between the
interests of secured parties and third parties (buyers or
each rule should be expressed as simply as
possible and be applied consistently across all types of
personal property and security interest;
the rules should be comprehensive and apply to
all types of personal property and to all types of security
interest unless there are clear policy reasons for an
the rules should be as flexible as possible
and should include as few formal requirements as possible;
the rules should provide transparency in
relation to the existence of security interests; and
the rules should fit and be able to function
in harmony with the balance of our law.
Was anything recommended to be done now?
Two recommendations were made by the interim report. These
the review continue to engage with the Australian
Financial Security Authority (AFSA) and in particular that
AFSA's advice be sought on the practicalities of any proposed
changes to the PPSR and their likely associated costs and timing;
and AFSA, in conjunction with small business representatives
(particularly those representing the interests of retention of
title suppliers and the hiring industry) and their advisers,
develop a targeted short-term, multi-faceted education and
awareness raising campaign designed to:
make affected small businesses more aware of the
existence of the PPSA and that it can affect them; and provide more
guidance on how small businesses can make effective registrations
for their most common types of security interests.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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