The Personal Property Securities Register (PPSR) enables people to make more informed financial decisions—whether it’s a bank lending money to a business, a new driver buying their first car, or somebody selling goods on consignment.
The PPSR helps to address asymmetries of information between, for example, borrowers and prospective lenders, and sellers and prospective buyers of used vehicles.
Borrowing—particularly by small and medium enterprises (SMEs). A business seeking finance can use its collateral (personal property) to give lenders greater certainty and lower their risk profile. However, in the absence of a facility to check that property is available to be used as security for repayment, lenders might perceive proposed loans as more risky—and either not lend at all, or lend at a higher interest rate to reflect this risk. The PPSR widens the range of collateral that borrowers can use to obtain finance, and provides a facility to give notice that personal property is being used to secure repayment.
The private used car market—sellers know more about what they’re selling than buyers. This can affect market prices, as the price that buyers are willing to pay can be influenced by their uncertainty about the quality and status of the goods that they are purchasing. The PPSR offers buyers the opportunity to check whether a vehicle for sale is being used as security for an existing loan, or whether it has ever been reported as stolen or written off. This information increases the prospective buyer’s level of certainty and supports appropriate pricing across the entire market.
Similarly, those selling a used vehicle do not have their prices adversely impacted, if they can demonstrate that their vehicle has a ‘clear’ status (ie. that the vehicle isn’t being used as security for a loan and that it hasn’t been reported as stolen or written off).
Lending credit—As lenders are better able to accept a wider range of collateral to secure finance than was possible before the PPSR commenced operation, it can help open up access to finance, particularly for SMEs.
People search the PPSR every day for information to help them make important financial decisions—both personal and commercial. As PPSR searches and registrations give people confidence when they are buying or lending, there are financial consequences if the information they receive is wrong. Making ineffective registrations—or a failure to register on the PPSR at all—can have serious implications for the parties concerned.
The value of PPSR data isn’t just in individual records. When we aggregate the individual records, the data gives us key insights into economic trends. For example:
We estimate that the PPSR supports around 24% of GDP, so changes in PPSR activity can indicate broader economic changes.
We can identify, in broad terms, the types of collateral used to secure credit. In the past, real property, like houses, has typically been used as the main form of collateral by SMEs. The PPSR data helps us to analyse changes in the use of other forms of collateral.
Using analytics to combine PPSR data with data from other sources should provide more, new insights.
The accuracy and accessibility of PPSR data is critical. It underpins financial decisions both personal and commercial and, at the aggregate level, it can inform our understanding of the broader economy. To ensure that PPSR data can be relied upon for these decisions, it’s important that we protect it.
I’ll talk more about this next time.
Personal Property Securities