After national incorporation and prudential supervision, the personal property securities (PPS) reforms are the first real sign that a financial services business will be able to operate efficiently regardless of state borders. National consumer credit regulation is on its way with national e-conveyancing also on the agenda but it’s worth looking at the PPS reforms in a bit more detail to get an idea of what you need to do to prepare.

The Personal Property Securities Bill would establish a national framework for the regulation and registration of security interests in personal property, regardless of their current description.

Currently there are different formal requirement for securities (i.e bills of sale, chattel mortgages) in many jurisdictions and lenders need to search multiple registries when dealing with equipment finance, boats and vehicles.

The Bill would also establish a single national online register of personal property securities (the PPS Register). The new registration system would help prospective purchasers and lenders to determine whether personal property may be subject to a security interest and would facilitate the resolution of priority disputes. The PPS Register would replace the more than 40 existing registers currently administered by Commonwealth, State and Territory agencies.

What are the likely benefits?

• Simpler documentation and registration procedures
• financial product innovation and electronic/on-line transactions
• the ability for smaller specialist financiers to improve their competitive position

What do you need to do to prepare?

You need to use the transitional period to review lending policies, credit risk assessment models, computer systems, settle procedural manuals and processes, redesign forms and train staff.

The development of the PPS Register is progressing on schedule for a commencement date in May 2010. If you prepare, there will be significant benefits.