PPSR What It Is And Why It’s NOT Going Away!

Earlier this month, the Australian Financial Security Authority (AFSA) – better known as the people who the PPSR – released PPSR-related statistics for the July-September quarter.

As of the end of September 2017, there have been a total of 19,265,693 registrations – less than half of which were still current.

Unsurprisingly, Motor Vehicles comprised the single most significant collateral class. This category accounts for 49% of all current registrations. However, if you exclude Consumer-related transactions, this drops to 34%.

However, what piqued my interest this time was the extent to which Other Goods registrations have dominated over the last five years.

Five years ago, All Present & After-Acquired Property (AllPAAPs) registrations accounted for over 2 million registrations.

Other Goods registrations made up less than one million (944,000).

It’s hardly surprising that AllPAAPs are primarily the domain of banks and financiers. They would have clamoured to the PPSR upon its introduction – ensuring their interests were sufficiently protected from the outset.

On the other hand, Other Goods registrations are the key credit supplier, with Retention of Title rights. And, as we know, this disparate group isn’t always the most receptive when it comes to “Government Red Tape.”

However, over the past five years, the situation has changed.

During this time, AllPAAP registrations have remained static (even slightly declining), and Other Goods registrations power ahead.

The trend is led by trade credit suppliers understanding PPSR registration represents one more piece of “red tape” they need to accept. Suppliers are finally grasping the concept and are beginning to protect themselves over unpaid goods and give themselves a higher chance to stave off liquidators’ preference claim clawbacks.

Boasting over 2.6 million registrations, Other Goods represents the largest collateral class for non-consumer registrations.

PPSR is not going anywhere fast. It’s here to stay.

Credit suppliers are coming to terms with this and understand that if they fail to jump onboard and embrace the concept, it will contribute to significant losses.