After gathering dust for eight years, the Review of the Personal Property Securities Act has been taken up by Attorney-General Mark Dreyfus, who has released a draft bill to overhaul the controversial legislation.
The Act, passed in 2009, established a new regime for the creation, legal effect and enforcement of security interests in personal property. It created a single set of rules, bringing together 70 overlapping commonwealth, state and territory laws and regulations.
The centrepiece was the establishment of the Personal Property Securities Register in 2012. The PPSR was designed to create a single national register of property with security interest.
Among the 40 registers that migrated their data to the PPSR were ASIC’s Register of Company Charges, state registers of encumbered vehicles, state bill of sale registers and state crop and livestock mortgage registers.
The 2015 review found that the scheme had improved consistency in secured transaction law but said the law and also the operation of the PPSR were too complex. It concluded that the Act and the PPSR were not meeting their goal of providing “more certain, consistent, simpler and cheaper arrangements for personal property securities”.
The review recommended simplification of core concepts, including intermediated securities, collateral and security interests. It also called for clarification of definitions, changes to the layout of the Register, simplifying the language and making it more familiar to Australian users.
One theme in the review was that the law would work better if it was subject to fewer exclusions and it recommended that government consider whether such areas as interests in life insurance policies, water rights and fixtures be covered by the law.
One of the aims of the PPSA was to increase the range of property available to secure finance and, in this way, assist borrowers to use their assets as collateral and enhance their ability to raise cost-effective finance.
"Simpler and clearer rules would give financiers greater confidence in the law and their ability to take effective security interests," the review said.
Some of the more technical aspects of the review included recommendations on the treatment of long-term leases, such as operating leases, which in the view of some submissions fall outside the area of secured finance.
For whatever reasons, successive Coalition governments ignored the review.
In a statement on Friday, Dreyfus said the government had accepted 345 of 394 recommendations in the review. The reforms outlined in the consultation paper and draft bill cover the reach of the PPSA, the creation of an effective security interest, dealing in collateral, enforcement of security interests, registration processes and regulatory powers.