On 22 September 2023, the Attorney-General’s department announced a public consultation on the Australian Government’s response to the Final Report of the 2015 statutory review of the Personal Property Securities Act 2009 (Cth) (PPSA). This review was known as the Whittaker Review.

Background

The personal property securities (PPS) system revolutionised Australia’s secured finance framework by establishing a new regime for the creation, legal effect and enforcement of security interests in personal property ie. property other than land. Australia’s PPS system:

• replaced 70 different laws and consolidated 40 registers of security interests into one national online (real-time) register
• introduced rules of enforcement ie. a process which secured parties can follow upon default of repayment obligations, and
• introduced a comprehensive system of priorities between competing interests in terms of recovery against the proceeds of collateral.

A 5-year review of the PPS System was conducted in 2014, headed up by Mr Bruce Whittaker, with the final report delivered in 2015.

The review at a glance

The Whittaker Review found that the PPSA is considered by lawyers and insolvency practitioners to be a challenging and highly technical piece of legislation. The Review made 394 recommendations with the overarching aim of simplifying the personal property securities framework and allow the PPSA to better meet its objectives. Industry stakeholders have been strongly advocating for implementation of the Review recommendations, including at the current Parliamentary Inquiry into Corporate Insolvency in Australia.

The Whittaker review commented that:

“There is no magic bullet in this endeavour. Rather, improvement will come from a large number of mostly small changes. Individually those changes may seem minor, but in aggregate they can have the capacity to dramatically improve the Act. That, in turn, will enhance the ability of businesses and consumers to use their assets as security, and to access cost-effective finance in Australia.”

The government’s response to the review

Of the 394 Whittaker recommendations, the government has accepted 345 (an acceptance rate of almost 88%). As a result, the government has developed a comprehensive reform package in response to the recommendations, which includes:

• amendments to the PPSA, and
• new Personal Property Securities (PPS) Regulations.

The aim of these reforms is to achieve a more transparent, consistent and accessible PPS framework.

Hence, the government’s proposed reforms are intended to provide clearer, more accessible rules for the granting, validity and enforcement of security interests via the PPS Register and seek to better address the current needs of Australia’s commercial environment. In summary, the proposed reforms aim to:

• provide clarity by enhancing uniformity and certainty in the PPSA,
• provide consistency by streamlining key concepts across the PPS framework,
• improve the functionality of the PPSA and Regulations including the PPS Register, and
• amend the scope and operation of the PPSA.

The proposed reforms are designed to assist:

• Small businesses – a more usable PPSA will help to enhance access to finance, and reduce the risk of detrimental errors and compliance costs which may need to be incurred.
• Financiers and their clients – further simplification of the PPSA would improve efficiency and provide greater certainty in terms of the PPSA’s application to potential financing arrangements. This in turn would reduce the costs for financiers and reduce risk premiums which are factored into pricing.
• Consumers – consumers may grant security interests over their assets and can benefit from the increased availability of finance. Consumers may also search the PPS Register for encumbrances over assets and benefit from reforms made to make the PPS Register more usable.

The public consultation

The government is seeking feedback on the proposed reform package, in order to ensure that the proposed amendments are relevant, effective and suited to the needs of Australia’s commercial environment. The amendments are designed to reduce complexity for users of the PPS framework, particularly in regards to the PPS Register.

The government believes that feedback from impacted stakeholders and industry participants will be invaluable in helping to ensure that the proposed reforms achieve their stated objectives. This includes identifying areas which require further consideration and consultation. The government wishes to hear from all users of the PPS framework and the PPS Register, and welcomes feedback from a diverse range of viewpoints, including individuals, SMEs, lawyers, accountants and public sector agencies.

The government is also keen to hear the views of industry stakeholders on recommendations which have not been incorporated into the government’s proposed reform package.

Have your say

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