What are the attributes of an effective secured transaction system?
In my last post I talked about how the Personal Property Securities Register (PPSR) improves transparency within the economy, enabling business and consumers to make informed decisions. It does this by allowing consumers to check whether a security interest, or encumbrance is attached to things like cars, boats or artwork before they buy them. At the same time, the PPSR offers businesses risk protection when buying, selling or renting out goods—and it can also help them to raise finance through the use of business goods and assets as collateral.
Critical to the effectiveness of a system like the PPSR is trust—business and consumers must have a high degree of confidence in the information it contains. The data held on the PPSR must be reliable, accurate and up to date.
For this reason one of my roles as Personal Property Securities Registrar is to ensure the PPSR is and remains a highly effective tool that businesses and individuals can rely on both now and in the future.
So how do I go about fulfilling that role?
Well, at AFSA we use a number of integrated strategies to preserve the integrity of data held on the PPSR. This includes:
- robust fit-for-purpose controls to preserve data security
- engineering out problems that might cause data to be incorrectly entered onto the PPSR
- data analytics that enables early identification of potential issues
- close engagement with stakeholders who are able to provide feedback on emerging issues within different sectors
- targeted information that supports correct use of the PPSR
- judicious use of Registrar powers.
All of these work together to make information held on the PPSR as up-to-date and accurate as possible.
Over the coming months I will touch on some of these in a little more detail, but today I wanted to have a brief discussion about how the exercise of my Registrar powers helps to keep the PPSR an effective tool in the Australian economy.
Under the Personal Property Securities Act (PPS Act), I have certain powers to amend, end, remove and restore data. Through careful use of these powers, the integrity of the record can be preserved; particularly where there is an error, dispute or misuse.
As registrations held on the PPSR touch upon on the rights of two or more parties—and those wanting to deal with those parties, any decisions that I (or a delegate) makes that will change the register, can only take place after all relevant interests have been considered.
Where there is any doubt about the potential impact of a decision on a known or unknown party, caution must be exercised to ensure the decision does not undermine the reliability of the PPSR.
The underlying principle is succinctly expressed in a decision from the US, where a court was asked to correct an erroneous registry filing by a party under the US PPS Act equivalent; the UCC. In its 1980 decision the Court made the following statement, which has been quoted with approval over the years in other US court decisions:
‘Although strict adherence to the [UCC] requirements may at times lead to harsh results, efforts by courts to fashion equitable solutions for mitigation of hardships experienced by creditors in the literal application of statutory filing requirements, may have the undesirable effect of reducing the degree of reliance the market should be able to place on the [UCC] provisions. The inevitable harm doubtless would be more serious to commerce than the occasional harshness from strict obedience.’ 
Although the approach of the US courts is not directly applicable to Australia, it highlights the care that must be taken when looking to make any changes to information on a register like the PPSR, due to the importance of these registers to commerce.
It is with this in mind that I publish practice statements that explain the process that is followed in relation to some of the powers that impact the PPSR. A recently published example of this is Practice Statement no. 8 that sets out the range of considerations that are taken into account before any decision is made to exercise discretion to restore a registration.
I hope you have found this helpful in understanding one aspect of how we are working at AFSA to support the ongoing effectiveness of the PPSR. Until next time…
 Security National Bank and Trust Co. v. Dentsply Professional Plan, 617 P.2d 1340 (Okla.1980) at 1343, quoted with approval in ACF 2006 Corp. v. Merritt (unreported) 2013 WL 466603 and Official Committee of Unsecured Creditors of Motors Liquidation Company v JPMorgan Chase Bank, No. 325 2014, 2014 WL 5305937 (Del. Oct. 17, 2014). p8 – see http://courts.delaware.gov/opinions/download.aspx?ID=213480