The Australian Small Business and Family Enterprise Ombudsman has put a rocket under the government, urging it to act on a review of the Personal Property Securities Act the Attorney-General has been sitting on for five years.
And ASBFEO has produced its own research paper on the PPSA and the Personal Property Securities Register, calling for additional reforms to the scheme.
The PPSR, which was launched in 2012, was designed to create a single national register of property with security interest. Registers that migrated their data to the PPSR included the Australian Securities and Investments Commission’s Register of Company Charges, state registers of encumbered vehicles, state bill of sale registers and state crop and livestock mortgage registers.
There were complaints about the overly technical and complex nature of the scheme right from the start and in 2015 the government commissioned a review. It has not acted on the recommendations.
That review, undertaken by Ashurst partner Bruce Whittaker, said the scheme had improved consistency in secured transaction law but found that the law and also the operation of the PPSR were too complex and their meaning often unclear.
Whittaker made a large number of recommendations, including clarification of definitions, changes to the layout of the Register, simplifying the language and making it more familiar to users, and simplifying core concepts such as intermediated securities, collateral and security interests.
ASBFEO has backed most of Whittaker’s recommendations and called for additional changes that it said will make the system more transparent.
Its paper said small businesses have found the operation of the register complicated and its language overly technical. Many business owners said they would be unable to navigate the system without the help of a lawyer, which creates additional cost.
“The recommendations of the Whittaker review may clarify how the Act operates but those recommendations will not by themselves allow a small business to utilise the register with certainty,” the ASBFEO paper said.
“Small businesses are often unaware of registrations over their business until they offer their assets as security when they seek finance or look to sell assets or the business. There are inherent design shortcomings in the PPSR which can exacerbate this situation.”
It has recommended that the registrar should send a verification statement to both the secured party and the grantor and that the PPSR be linked to a platform or portal regularly accessed by small businesses.
It wants registration and search functions in the system overhauled to make them less legalistic, presented in plain language and provide more guides for infrequent users.
It wants the addition of a simple search function that would show whether goods and assets under consideration for purchase are free of other interests. And it wants the scheme to include a monitoring facility to allow business owners for check for interests over their businesses and actively seek the discharge of obsolete interests.