The Australian Government is seeking stakeholder feedback on proposed changes to the Personal Property Securities Act 2009 (Cth) (‘PPSA’) that have been prepared in response to the 2015 Whittaker Review. These changes are outlined in the exposure draft package (‘Exposure Draft Package’), including amendments to the PPSA and Personal Property Securities Regulations 2010 (Cth) (‘PPS Regulations’).
What are the aims of the exposure draft package?
The changes to the PPSA and PPS Regulations aim to simplify the personal property securities framework for easier understanding and use, and provide clearer, more accessible rules for the granting, validity and enforcement of security interests in personal property.
The 2015 Whittaker Review made 394 recommendations. The Government proposes to accept 345 recommendations, some in full and others in part. The Exposure Draft also includes amendments relating to nine recommendations that the Government proposes to not accept, but where the scope or policy intent of the provision has been clarified.
At a high-level, the proposed amendments to the PPSA seek to (among other things):
- modify definitions of 'personal property' and 'security interest’, and clarify related exceptions;
- improve rules on security interest attachment, third-party effectiveness and perfection;
- update how the PPSA regulates collateral dealings, proceeds, accession interests and simplifying knowledge requirements;
- replace Chapter 4 for clearer security interest enforcement, mandatory provisions and consumer protection;
- update the process for amendment demands, defining collateral in registrations and allowing multiple class registrations;
- expand the PPS Registrar's authority by adding infringement notice and injunction provisions;
- offer a detailed Chapter 7 summary, clarify foreign security interest recognition and revise enforcement rules for various property types; and
- reduce the number of collateral classes from nine to six categories to further streamline registration requirements and reduce complexity. The six categories proposed are serial-numbered property (with sub-classes for the different types of serial-numbered property), goods, accounts, intangible property and financial property, all present and after-acquired property and all present and after-acquired property except.
Further consultation is also sought on how best to approach the transitional arrangements, including those related to the Personal Property Securities Register (‘PPSR’), should the amended PPSA be introduced to Parliament and proceed to commencement.
The two main approaches being considered are grandfathering provisions and temporary perfection. The temporary perfection model was adopted when the PPSA first came into force to transition existing security interests, from the various state, territory and federal registers, to the PPSR. The legal, operational and practical implications of both of these options will need be worked through.
The Government has invited feedback on the proposed reforms and whether they will meet the needs of lenders, consumers and businesses. The submission period opened on 22 September 2023 and is set to close 17 November 2023.