2 November 2023

Proposed Changes to the Personal Property Securities Act 2009

On 22 September 2023, the Federal Government finally gave its comprehensive response to the Whittaker Review of 2015 in the Personal Property Securities Act 2009 (‘PPSA’) by issuing an exposure draft of the proposed Personal Property Securities Amendment (Framework Reform) Bill 2023.

The proposed Bill comes after some initial changes to the legislation were made in 2015 and 2017 and follows a consultation process with industry sectors, as well as States and Territories offices.

The exposure draft of the Bill is currently in its public consultation period, with the period for making submissions set to conclude on 17 November 2023.


What does the Bill propose?

At this time, the Government is proposing to accept 345 of the 394 recommendations made by the Whittaker Review.

The proposed changes to the PPSA will seek to provide reform in 7 critical areas:

  1. Clarify which interests should be included in the PPSA, including by introducing amended definitions of ‘personal property’ and ‘security interest’.
  2. Improve the rules for how security interests attach to collateral, and how a security interest can be perfected and made effective against third parties.
  3. Clarify rules regulating dealings in collateral, including proceeds, interests in accessions and or commingled or processed goods, knowledge requirements for the take free rules to apply, and the timing for resolving priority disputes between security interests.
  4. Introduce a new more clear regime for how security interests can be enforced, including clarifying what provisions are mandatory and cannot be contracted out of.
  5. Simplify the process for making amendment demands, and the rules for completing registrations to reduce the incidence of errors and improve the functionality of the PPS Register.
  6. Expand the regulatory powers of the PPS Registrar to include the issue of infringement notices and obtaining injunctions.
  7. Provide clarity on when a security interest in collateral in a foreign jurisdiction will be recognised under the PPSA and the governing rules for financial property.

Individual and notable proposed amendments include:

  1. A simplification in collateral classes, from 9 to 6. The proposed new 6 classes are:
    1. Serial numbered property (with associated sub-classes for different types of serial numbered property);
    2. Goods;
    3. Accounts;
    4. Intangible property and financial property;
    5. All present and after acquired property (ALLPAP) with no exceptions; and
  2. All present and after acquired property (ALLPAP) with exceptions.
  3. Removing bailments from the definition of a PPS Lease, but expressly capture the security interest of pawnbrokers.
  4. Extending the definition of an ADI account to foreign bank accounts and RBA accounts.
  5. Extending the temporary perfection period for proceeds from 5 business days to 10 business days.
  6. Clarify that ‘knowledge’ for all purposes includes both actual and constructive knowledge.
  7. Clarify the current rule that security interests in personal property to which the National Credit Code applies are excluded from the operation of the enforcement provisions of the PPSA.
  8. Remove the registration tick box requirements for ‘PMSI’, ‘commercial’ or ‘consumer’, and if the collateral includes ‘inventory’.
  9. Giving a secured party the right to purchase collateral without requiring the consent of the grantor or a higher-priority secured party if purchased at a public sale for market value, and require persons objecting to a secured party retaining collateral to provide proof of adverse effect if requested.
  10. Exempting a security interest in a PPS Lease that is not intended to secure the performance of an obligation from the vesting rules of section 267.
  11. Limiting registrations against individuals, or serial-numbered property of grantors who are individuals, to a maximum term of 7 years.
  12. Requiring an approved form to be used for amendment demands on secured parties to be consistent with the form provided to the PPS Registrar, and changing the obligation of the PPS Registrar from a need to assess an application for amendment on its merits, to the giving of a ‘show cause’ notice on the relevant secured party and an assessment of the response.
  13. Giving the PPS Registrar the ability to issue infringement notices and obtain injunctions as mentioned above.


One of the requirements that the Federal Government is not proposing to accept, is to repeal the provisions of the Corporations Act requiring security interests over a company to be registered within 20 business days of attachment in order to remain effective against an external administration of the company occurring within 6 months. The Government has based this rejection on the need to discourage and protect against fraudulent registrations made prior to a company’s insolvency. Fair enough, although this means that the dreaded applications to the Court to order extensions of time, and the risk associated with secured parties failing to register correctly on time, will continue.


Transitional arrangements

The Government has also sought feedback on the transitional arrangements for the proposed reforms.
At this time, two approaches are being considered:

  1. Grandfathering approach – which means security interests created pre-reform will continue to exist and remain governed by the old laws. This approach has the advantage that it will not require secured parties to take any action to maintain their interest, but will result in two sets of laws running side by side, potentially indefinitely, and therefore give rise to complications possibly well into the future; or
  2. Temporary perfection approach – which means security interests will remain perfected for a temporary period during which secured parties will need to take action to review and perfect their interests under the new laws.


The temporary perfection method is the approach that was adopted when the PPSA was first enacted, so it may very well be the one that is adopted again on this occasion.


When will we know further?

The above is simply an outline of what is being proposed, which is subject to review after the public consultation period, and ultimately subject to parliamentary approval.

It’s hard to know when final reforms will come into effect, however, now that an exposure draft has been released, we should expect the legislative process to move a little faster than since the Whittaker Review in 2015. Watch this space for more updates from us on the subject.


Bennett & Philp Lawyers’ banking and finance team specialise in providing legal advice in the area of securities law. You are invited to contact us to discuss your personal situation.


Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).

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