Introduction
This report provides an overview of the Personal Property Securities System administered by the Australian Financial Security Authority (AFSA) under the Personal Property Securities Act 2009. Complementing our annual report, insights are sourced from AFSA’s compliance program, market surveillance and stakeholder engagements and are reported in financial years.
The Personal Property Securities Register (PPSR) is a critical piece of credit system infrastructure that underpins Australia’s $3.5 trillion credit system. As outlined in this report, the PPSR readily supports and protects the credit system. We prioritise raising awareness about the PPSR’s financial protection role to create a positive impact for consumers and business and, to address harms.
Highlights
- More than 1.4 million businesses, representing 56% of all Australian businesses and 2.1 million consumers access lines of credit and purchase goods through PPSR asset registrations. There is no significant misuse of the PPSR.
- The PPSR search-to-new registration ratio continues to grow and currently sits at 5.9. This is high by international standards and indicates strong lending and credit practices in Australia.
- The PPSR provides financial protection for businesses and consumers in a market where cost of living and supply chain constraints drive transactions toward second-hand goods.
Current state of the personal properties securities system
The PPSR supports the flow of credit by enabling Australian creditors to safeguard their security interests and consumers and businesses to make informed commercial decisions. It is the only federated and fully digitised secured transactions register in the world.
In the current economic environment, many Australian businesses and consumers are experiencing financial stress with high inflation, rising interest rates and high energy prices. While personal insolvencies remain below pre-pandemic levels, corporate insolvencies are returning towards historical levels. Therefore, businesses and consumers should apply prudent credit practices to protect their security interests.
To ensure confidence in the personal property securities system and a strong credit system for Australia, AFSA continues to broaden our regulatory toolkit to respond to new and emerging harms. We do this by combining our regulatory expertise, market surveillance and data analytics to balance the interests of stakeholders.
System trends
Launched in January 2012, the PPSR replaced many state-based registers to form one national register. These included the Register of Encumbered Vehicles (REVS) and the Australian Securities and Investments Commission’s Register of Company Charges. The PPSR is an online noticeboard with more than 10.1 million active registrations and is accessible 24/7. It holds registrations with a potential economic value of $400 billion, which is around 20% of Australian GDP.
Figure 1: Registrations and discharges on the PPSR by financial year
PPSR users include governments, businesses and consumers. Over the past 10 years, on average there have been 2.1 million new registrations on the PPSR each financial year (Figure 1).
In the 2021–22 financial year, there were 2.0 million new registrations, driven by motor vehicle (69%) and registrations of other goods (22%) such as equipment and merchandise. This is consistent with historical trends. See Appendix A for further information.
Amendments and discharges are important practices undertaken by secured parties to ensure the PPSR’s quality of information. AFSA amends and removes registrations to maintain the PPSR’s integrity. Figure 1 shows there is a healthy level of dynamic renewal; over the past 10 years there are on average 1.8 million amendments, 1.8 million discharges and 2.1 million new registrations each financial year.
Figure 2: Searches and new registrations on the PPSR by financial year
The PPSR is accessed through business-to-government (B2G) and web user interface (UI) channels. PPSR searches were not impacted by the COVID-19 pandemic. Figure 2 shows there was a 9.8% increase in searches during the 2021–22 financial year, which is above the 5-year growth rate of searches (+6.2% annually). This reflects growing public awareness about the PPSR’s financial protection.
Market insights
The economic landscape is quickly evolving. AFSA is committed to credit system stewardship and our stakeholder engagement insights demonstrate:
- exposure of businesses and consumers to second-hand market risks as ongoing global supply chains have impacted the supply of vehicles, machinery and other goods
- an increasing number of liquidators and trustees use the PPSR to help identify potential secured creditors when winding up a business, contributing to an increase in grantor searches (see Appendix A)
- infrequent users, including young people, the elderly, small and micro businesses are often exposed to hidden harms when purchasing motorhomes, motor vehicles and valuable second-hand goods.
Financial literacy is a strong concern across the credit system and, unscrupulous businesses and consumers selling assets with undisclosed debts. Our priority is raising awareness and education about these harms. We are vigilant through our compliance program and use education and outreach programs to consumers, businesses, market participants and government agencies.
Regulatory supervision
Registrations on the PPSR help businesses and consumers access lines of credit to provide goods and services. Across the 10.1 million active registrations, more than 1.4 million businesses (56% of the 2.6 million Australia businesses) had security interests registered against their assets on the PPSR in 2021–22.
There were 1.4 million new business property registrations in 2021–22 across a wide distribution of industries. Figure 3 shows the most common industries for new registrations by businesses were construction, rental, hiring and real estate services and transport postal and warehousing.
Figure 3: New registrations on the PPSR by grantor industry for 2021–22 financial year
The PPSR supports consumers’ access to lines of credit and finance for goods. This includes cars and equipment. Across the 10.1 million active registrations, 2.1 million consumers had security interests registered against their personal property. There were 0.6 million new registrations by consumers in 2021–22 (Figure 3). Motor vehicles are the most common registration for consumers, representing 97% of new registrations during 2021–22, which is consistent with historical trends.
Figure 4: Ratio of searches-to-new-registrations by financial year
Awareness in Australia is growing about the risks of inheriting undisclosed debts in transactions. The search-to-new registration ratio for the PPSR has steadily increased to 5.9 in 2021–22 (Figure 4). This is high by international standards and indicates prudent credit lending and purchasing practices. Lower ratios suggest that registrations are a formality and is symptomatic of poor credit practices and product awareness.
Many businesses and financial lenders that operate on terms such as the retention of title or consignment benefit from registering their interest in goods that they have yet to receive a payment. Currently, there are more than 168,000 different secured parties on the PPSR, which gives these consumers and businesses a higher priority to recover goods or money if their counterparty becomes insolvent.
Figure 5: Secured party new registrations by industry in the 2021–22 financial year
PPSR registrations continue to be concentrated across financial services (Figure 5). More than 90% of the 2.0 million new registrations in 2021–22 were undertaken by 751 businesses. The financial and insurance services industry made 1.3 million (67.7%), followed by wholesale trade 158,000 (8.0%), rental, hiring and real estate services 120,000 (6.1%) and manufacturing 63,000 (3.2%). See Appendix B for further information about secured party concentration by number of new registrations.
Timely amendments and discharges are integral for the PPSR. This enables Australian consumers and creditors to make timely and informed financial decisions. AFSA’s education, compliance and enforcement programs help ensure the integrity of information on the PPSR. While there is no evidence of significant misuse, during 2021–22, more than 800 vexatious and unjustified registrations were removed, with 75 official cautions and 60 account suspensions for persistent, non-compliant behaviour.
Further information
Building a strong credit system for Australia and supporting the flow of credit is AFSA’s cornerstone objective for 2023 – and beyond.
The PPSR helps provide valuable risk protection for consumers and businesses alike. With a potential value of more than $400 billion in registered liabilities on the PPSR, our work is focused on considered and balanced stewardship to protect the integrity of the system.
Data in this report is sourced from AFSA’s live systems and may not completely reconcile with published statistics on our website. For the official statistics, see our quarterly PPSR statistics release.
For further information about this report, please contact media@afsa.gov.au
Appendix A – Registration and search insights
The primary channel for new registrations is the B2G channel (75.9%) followed by the Web UI (24.1%). Since the PPSR’s inception in 2011–12, the composition of registrations by channel has remained relatively stable. The Web UI channel is primarily used by infrequent users, such as consumers making a motor vehicle purchase, and small businesses who have not integrated the B2G channel into their operations.
Figure A1: New registrations on the PPSR by channel each financial year
PPSR searches are historically driven by motor vehicle enquiries. In recent years, organisational grantor searches have steadily increased, which reflects more businesses and consumers using the PPSR for financial protection. During 2021–22, 49.2% of searches were for motor vehicles and 46.8% were for organisational grantors.
Figure A2: Searches by type each financial year
Appendix B – Secured party insights
The PPSR’s volume of new registrations by secured parties is highly concentrated as indicated by Figure B1, which shows that 751 businesses performed more than 90% of the registrations in 2021–22.
Figure B1: Secured party concentration by number of new registrations in 2021–22
The volume of new registrations by secured parties is concentrated within financial and insurance services industry. There were 2.0 million registrations during 2021–22.
Appendix C – Financial protection case study
PPSR protection for getting your gear back if your customer can’t pay
Sam, a subcontractor, and his team of sparkies won a large job doing the wiring on an upmarket residential development.
Sam had a large amount of the cabling delivered to the site, so it was ready to go. It arrived a couple of days before the team were due to start installing.
When Sam and his team arrived on site a few days later, they were shocked to find the front gates locked. A sign on the gate said: Developer Denise Co. now under Voluntary Administration, contact Adam Administrator for site access.
Sam had lost gear in the past, so he knew exactly what to do to get his stuff back, most importantly he knew he had to act fast.
First, he emailed Administrator Adam saying he had cable across the site that hadn’t been installed yet. He told Adam he could identify it and that thanks to his contract and PPSR registration, he was a secured creditor with priority rights to collect any cabling still unpaid for.
Sam attached a copy of his paperwork, which included his retention of title supply contract with Developer Denise Co. and a copy of the PPSR registration certificate to support his claim. Sam was also quick to stop any further cable deliveries to Denise’s site.
Adam the Administrator assessed Sam’s claim and checked his PPSR. Fortunately for Sam all was in order and Adam was happy to give consent for Sam to access the site to collect his cable.
For more information on how to protect goods supplied on credit, whether its pipes, gravel or formwork – basically anything that isn’t nailed down – visit PPSR and the construction industry.