Australian Government: Attorney-General's Department
Australian Government: Attorney-General's DepartmentAchieving a Just and Secure Society

Personal Property Securities Reform

Personal Property Securities

Personal property is any form of property other than land or buildings and fixtures which are legally treated as forming part of land. Personal property can include tangibles (eg cars, boats, machinery, crops) and intangibles (eg shares, intellectual property, receivables and contract rights).

If an individual or business wants to borrow money they will often find it easier and may obtain a lower rate of interest if they offer a piece of property as security. Personal property that might be offered as security for a loan includes cars, or the trading stock and equipment of a business.

Why reform Personal Property Securities?

In Australia today, there are significant limitations on the use of personal property as security due to complexities and gaps in the arrangements for registering security interests. The rules for registering an interest and whether an interest can be registered at all vary widely. The Commonwealth, States and Territories all have their own personal property schemes with separate registers and legislation relating to those registers. The current requirements for registering a security interest in personal property vary depending on the type of personal property, where it is located and whether the property belongs to an individual or a corporation.

Consequently, the existing legal arrangements are costly and lack certainty around the priority of competing secured creditors.  Existing registration requirements are fragmented and vary considerably between jurisdictions.  Whether a personal property security can, needs to be, or may be registered depends on the jurisdiction, the type of interest, the class of debtor, the type of property, the location of the property and the kind of transaction.  Further, there is overlap between existing registration statutes. Some personal property security transactions are subject to more than one registration requirement in the same jurisdiction, or need to be registered in more than one jurisdiction.

The aim of Personal Property Security Reform is to improve the ability of individuals and businesses, particularly small-to-medium size businesses, to employ all their property in raising capital. Personal property securities reform has been successfully implemented in the United States, Canada and New Zealand, where the reforms have been widely accepted, as an improvement on previous arrangements.

Currently most of the States, Territories and the Commonwealth Government maintain registers for some Personal Property Securities. The introduction of the Personal Property Securities Register will bring all of this information together in the one, definitive register of personal property securities.

The new national Personal Property Securities system will begin operating in May 2011.

The Reform Process

In May 2006, the Australian Government launched a review of the law on personal property securities with a series of seminars held in Sydney, Brisbane, Melbourne, Adelaide and Perth.

The seminar series followed the release by the Standing Committee of Attorneys-General (SCAG) of an options paper for public consultation on 11 April 2006.

The options paper canvasses the existing arrangements for personal property securities including the difficulties with those arrangements, and outlines reform options based on the New Zealand Personal Property Security Act 1999 and a draft Bill sponsored by the late Professor David Allan.

At the March 2005 meeting of SCAG, Ministers formed an officers’ working group to examine the possible options for personal property securities reform and to develop proposals for Ministers to consider. The Australian Government Attorney-General’s Department is chairing the working group.

On 13 April 2007, the Council of Australian Governments (COAG) agreed, in-principle, to establish a national system for the registration of personal property securities, which will be implemented by Commonwealth legislation supported by a referral of legislative power by the States to the Commonwealth.

In developing proposals for the national system, there have been four discussion papers released on personal property securities reform. Discussion Paper 1 deals with registration and search issues. Discussion Paper 2 deals with legal issues arising as part of the proposed reforms, including extinguishment, priorities, conflict of laws, enforcement and insolvency rules. Discussion Paper 3 focuses on security interests in investment property, such as shares, and other monetary obligations.

Public comment has been invited on each of the first three discussion papers. Submissions from stakeholders contributed towards the formulation of a draft exposure bill.

The fourth discussion paper released in August 2008 paper focused on the PPS regulations. An updated version of the Discussion Paper on regulations was released in October 2009. For further information on the development of PPS Reform visit the History of PPS page.

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Personal Property Securities Act

The Personal Property Securities Act and the Personal Property Securities (Consequential Amendments) Act received Royal Assent on 14 December 2009. Copies of both Acts are available from the ComLaw website. Unofficial copies of the marked up version of the PPS Bill with amendments included are available from the PPS downloads page. The official version will be available on the ComLaw website shortly.

Referral of legislative power

The national PPS scheme will be supported by a referral of legislative power from the States. NSW, Queensland, Victoria and South Australia have passed referral legislation. Referral legislation from Western Australia and Tasmania is anticipated in 2010.

Personal Property Securities Regulations

On 29 August 2008, the Australian Attorney-General’s Department released a discussion paper about the content of the regulations to be made under the Personal Property Securities Act. The Department undertook consultations on the discussion paper with key stakeholders in the finance, banking and credit management sectors. The Department received thirty submissions on the regulations.

A revised paper on the PPS Regulations was released in October 2009 and is available from the PPS downloads page.

Implementation and Development of the PPS Register

Data migration planning is underway to prepare existing registers for seamless transition to the new arrangements and so that there are no gaps in the Register's information. Significant effort is being applied to stakeholder engagement to ensure register users, current register teams and interested parties are fully involved in, and informed of, the progress of the Register.
The PPS Register will be supported by a Customer Contact Centre and the process of establishing the Contact Centre is underway. For further information see PPS Register.

Registrar’s Office - ITSA

The Insolvency and Trustee Service Australia (ITSA) will assume responsibility for the PPS Register and Customer Contact Centre when the Register commences operation in 2011.

This new role will build on ITSA’s existing core business as an information provider to major creditors and financial institutions and the public.

Over 2010 ITSA will work with the Attorney-General’s Department to implement the PPS regime, set up the PPS Register and establish the Customer Contact Centre.

Contact us

Personal Property Securities Branch
Australian Government
Attorney-General’s Department
3-5 National Circuit
BARTON ACT 2600
Email: pps@ag.gov.au