by Anne Wardell, Editorial Content Manager
On 18 March 2015 the government released Mr Bruce Whitaker’s final report on the statutory review of the Personal Property Securities Act 2009 (PPSA). The report recommends that the PPSA not be repealed but makes nearly 400 recommendations for improvement.
The Attorney-General requested Mr Whitaker to consider the following issues as part of the review of the Act:
(a) the effects of the reforms introduced by the PPS Act on:
(i) Australian businesses, particularly small business
(ii) Australian consumers
(iii) the market for business finance in Australia, and
(iv) the market for consumer finance in Australia
(b) the level of awareness and understanding of the PPS Act at all levels of business, particularly small business
(c) the incidence and, where applicable, causes of non-compliance with the requirements of the PPS Act particularly among small businesses
(d) opportunities for minimising regulatory and administrative burdens, including costs, on businesses, particularly small business, and consumers
(e) opportunities for further efficiencies in the PPS Act regime including (but not limited to) simplification of the Personal Property Securities Register and its use
(f) the scope and definitions of personal property covered by the PPS Act
(g) the desirability of specifying thresholds for the operation of the PPS Act regime in respect of particular types of personal property
(h) the interaction of the PPS Act with other legislation including the Corporations Act 2001, and
(i) any other relevant matters.
The Executive Summary provides, inter alia, the following overview:
1.2 Effect of the reforms
The Replacement Explanatory Memorandum for the Act stated that the purpose of the Act was to provide “more certain, consistent, simpler and cheaper arrangements for personal property securities”. The clear feedback from submissions to the review is that much still needs to be done if the Act is to achieve these goals. The Act has improved consistency in Australia’s secured transactions laws, but submissions emphasised that the Act and the Register are far too complex and that their meaning is often unclear, and that the resultant uncertainty has not allowed the Act to reach its potential. Submissions maintained that much can be done to simplify the content of the Act, and that this would make the Act much more accessible to users and easier to work with. Simplifying the Act will help it to achieve its objectives, as simpler and clearer rules can lead to more predictable outcomes. More predictable outcomes would give financiers greater confidence in the Act and in their ability to take effective security interests under it. That, in turn, would assist borrowers to use their assets as collateral, and enhance their ability to raise cost-effective finance.
1.3 What can be done?
Much can be done to improve the Act. The Act is significantly longer than the corresponding legislation in other jurisdictions, and while some of that additional length is attributable to constitutional or other machinery provisions, much of it flows from the very prescriptive nature of some of the drafting, and from the inclusion of additional provisions that may be of only marginal benefit. The Act has also adopted a number of concepts and policy choices from overseas models without it being clear as to what extent those concepts and policy choices were appropriate for Australian business conditions. The Act will be much more effective as a piece of Australian legislation if these concepts and policy choices can be tested against Australian operating conditions and expectations, and modified where this is needed.
Chapters 4 to 9 contain the recommendations made in the Report. I will review the recommendations made in each chapter separately in articles to follow.
The full report, which runs to over 500 pages, is available here.