Financiers and the PPSA

It is vital that banks and other financiers register correctly on PPSR to achieve the required security It is vital that the banks

The concept of placing registrations to secure an interest in a business or assets is not new to the finance industry. Banks and other financiers are well used to complying with the registration requirements of a number of different registers including the (now obsolete) Australian Securities and Investments Commission’s (ASIC) Register of Company Charges and the Register of Encumbered Vehicles (REVS) to name only two of the nearly forty that used to exist in place of PPSR.
It is fair to say that a number of banks and financiers have faced challenges interpreting the PPSA law and had issues interacting with the PPS Register often resulting in the failure to describe collateral appropriately, identify customers accurately (in accordance with PPSA grantor identification rules) and select the correct PPSR variables resulting in the financiers security either being deemed invalid or failing to achieve the required priority.
Our principal, Lynne Walton, has conducted PPSR compliance reviews on four financiers (three banks and one large finance company) and has found common issues including:-

  1. Verification that the proposed collateral actually exists and is unencumbered
  2. Internal systems compiling data and automatically generating registrations with poor visibility across what has actually been registered
  3. Disparate systems often in use with reliance placed on the diligence and competence of staff to make uneducated and unsupported registration decisions
  4. The inability of internal systems to cope with non standard collateral registrations such as aircraft and watercraft where exposures are often great

Not surprisingly, the key concern of financiers is that their Loans Management Systems accurately reflects their loan book. There is a reluctance to interfere with systems that achieve this to improve on PPSR compliance.
Access PPSR’s SiiP solution can sit alongside and complement existing systems without interfering with them to enable effortless compliance monitoring and early detection of errors ensuring swift remedial action.
Other financiers require more comprehensive SiiP services such as the verification of collateral existence, validation of serial numbers and search services to ensure assets are unencumbered (and continue to be upon settlement) prior to accurate and visible registration processing and full functionality PPSR portfolio management.
Contact us to find out more.