More than 80 per cent of businesses that have registered interests on the Personal Properties Securities Register (PPSR) are making serious errors which may limit or invalidate their rights.
It is in the best interest of businesses to register their property on the PPSR; however, the overall level of adoption in Australia remains low. Currently, there are only nine million registrations on the PPSR, about half of which are motor vehicles.
These are among the issues to be discussed at the PPSR Forum which was held in Brisbane recently. The Forum is one of a series being hosted by Veda, a leading provider of credit information and analysis in Australia and New Zealand and a wholly owned subsidiary of Equifax.
The ‘50 million reasons to have lunch with Veda’ series began with a forum in Melbourne last month. The series is bringing together senior executives from financial institutions, legal practices, trade creditors and other credit providers, to hear about the latest developments in Personal Property Securities (PPS) and gain insights into practical PPS solutions for businesses from industry experts.
Also discussed at the forums is the recent Forge Group ruling, which illustrates the 50 million dollar reason to comply with the PPS legislation.
Moses Samaha, Veda General Manager, Commercial and Property Solutions, said that any business supplying goods subject to retention of title, or hiring out equipment, that did not correctly register its interests on the PPSR was taking a huge risk.
“The legislation governing PPS greatly advantages trade credit and equipment suppliers that choose to comply and penalises those who do not. Despite this, a startling number of businesses are not correctly registering their interests on the system,” Mr Samaha said.
“According to Veda’s data, more than 80 per cent of businesses that have adopted the regime are making mistakes, which may limit or even invalidate their rights to recover their property, should one of their customers become insolvent,” he added.
The PPSR, which was first implemented in 2012, is governed by a number of highly complex rules and regulations, making the process of registering interests time consuming and taxing, particularly for large companies with a high volume of assets to register.
According to Veda’s insights, most registrations done without professional assistance are completed incorrectly.
“There are a number of steps during the PPS registration process that often trip people up. Some of the most common errors include: grantor (debtor) identification; property identification; errors in serial numbers; and errors in identifying the class of goods,” Mr Samaha said. “Due to the complexity of the registration process, it’s almost inevitable that some human error will occur if businesses are registering their interests manually and without aid. Additionally, there are timing issues which are often overlooked. “Engaging professional assistance takes the guesswork out of the registration process and helps keep businesses’ interests safe,” Mr Samaha added.
Veda’s suite of innovative PPSR solutions is designed to help businesses register on, update and search the PPSR with speed and accuracy.
EDX’s five tips for registering on the PPSR
EDX, experts in PPS registration and part of the Veda Group, recommends following these five steps when navigating the PPSR.
- Risk assessment– Consider if the PPSR is right for your business needs. If you supply goods or equipment and aren’t registered, assess why not and consider the risks of not being covered.
- Assurance review – Be sure your registrations are correct. There is no halfway house – if any mistakes have been made during your registration, any claim you make on your property down the track may be rejected.
- Correct any mistakes – Update your registrations with the correct information to ensure your property is protected. Seek appropriate professional assistance to ensure what you’re doing is right.
- Implement systems-based controls – Remove manual processes wherever possible to avoid human error, and update relevant business processes to maintain updated registrations on an ongoing basis.
- Consider your enforcement approach – Keep your registration documents in order and monitor your customers so you are in the best position to reclaim property in the event of insolvency.
Source: Veda Australia