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Sweeping reforms to streamline access to finance 


The Attorney-General has announced a raft of proposed reforms aimed at reducing compliance costs and improving access to finance for small businesses and consumers.

By Miranda Brownlee 9 minute read

The government has released proposed legislation in response to the Statutory Review of the Personal Property Securities Act 2009, also known as the Whittaker Review.

The main objective of the reforms is to simplify the personal property securities framework to make it easier for users to engage with, providing clearer, more accessible rules for the granting, validity and enforcement of security interests in personal property.

Attorney-General Mark Dreyfus said the government had accepted the vast majority of the findings of the Whittaker Review, including 345 of its recommendations, and had released draft legislation aimed at streamlining the process of granting, validating and enforcing security interests in personal property.

The government is currently seeking feedback on the proposed reforms and whether they meet the needs of lenders, consumers and businesses in the current commercial environment.

The Personal Property Securities Act 2009 was introduced to establish a single, national set of rules for secured credit using personal property. It replaced a complex and costly patchwork of over 70 Commonwealth, state and territory laws and 40 registers. Its framework applies to a broad range of users ranging from high-value entities to small businesses and individual consumers.

The Whittaker Review found that many small businesses were failing to comply with the act due to the complexity of the rules.

Stakeholders contributing to the review said the act had actually increased the cost of obtaining finance for small businesses despite the legislation attempting to achieve the opposite.

The Australian Banker’s Association said the complexity of the act, and in particular the volume and content of information on the register, had delayed transactions and increased costs.

The ABA said these additional costs had been passed onto borrowers as part of the cost of completing the transaction.

Almost all of the submissions from small businesses, or the organisations representing them, identified cost as an issue.

“Unlike a financial institution, which can usually pass its transaction costs on to its customer, a business that is a secured party under the act is likely to need to fund the associated costs itself,” the final report of the review said. “Those costs include professional advice such as legal fees, the costs of registering financing statements, and the internal administrative costs of dealing with the registrations.”

“The relative cost for a small business of getting a registration wrong can also be significant, as it could lead to the loss of what might be a substantial part of its asset pool if a customer becomes insolvent.”

The review made 394 recommendations in total aimed at improving and simplifying the Act.

The review was tabled by the Abbott government in February 2015 and has been ignored by the government until now.

Mr Dreyfus said it was vital that the act, which touches businesses and consumers around Australia, is kept up to date and is fit for purpose.

“Today’s government response is an important part of that task,” he said. “The response accepts 345 of the review’s recommendations and includes draft legislation designed to streamline the process of granting, validating and enforcing security interests in personal property.”



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