Current market conditions and the need for PPSR awareness
Economic conditions in 2025 present a mixed landscape for asset finance brokers. With arecent rate drop and another expected before mid-year, there is optimism that consumer confidence will return in the latter half of the year. However, brokers must also contend with external factors like the upcoming federal election, which historically leads to a temporary slowdown in major financial decisions.
For brokers, this period represents an opportunity to strengthen clientrelationships by ensuring their financial strategies align with current economic conditions. One key area requiring immediate attention is compliancewith the PPSA, as upcoming legislative changes are expected to have a substantial impact.
Key PPSA changes impacting brokers in 2025
Simon Reed, a nationally recognised expert on the PPSA, highlighted three major areas where changes in the act will affect asset finance brokers:
- Expansion of PPSA application:
- The definition of a security interest is broadening, catching many businesses off guard. Traditionally, security interests requiring registration were primarily associated with long-term leases under a PPS lease. However, recent legal rulings suggest that any arrangement where possession of goods is transferred, even outside of traditional leasing, could now fall under PPSA regulations.
- This means businesses supplying equipment as part of a service should carefully assess their need to register security interests to avoid losing their rights in case of customer insolvency.
- Legislative updates and stricter compliance requirements:
- Changes to the PPSA are making it increasingly important for brokers to ensure their clients comply with registration requirements.
- Equipment financiers are tightening their requirements for PPSR compliance, leading to potential delays in financing approvals if clients are not adequately prepared.
- As a result, brokers must be proactive in educating clients on the importance of PPSR registrations and helping them navigate compliance hurdles.
- Challenges in exercising security interests:
- One of the most significant issues discussed in the webinar is the increasing difficulty for equipment financiers to enforce security interests.
- Insolvency practitioners frequently seize assets from businesses that failed to register their security interests properly, leaving them without legal recourse to recover their property.
- Brokers must stress to their clients that failing to register a security interest can result in total asset loss when a customer becomes insolvent.
What brokers can do to stay ahead
To mitigate these challenges and protect their clients' interests, brokers should take the following steps:
- Educate clients on PPSR registration: Many businesses still fail to recognise the risks associated with unregistered security interests. Brokers should actively inform clients about these risks and encourage them to register their interests promptly.
- Ensure compliance before financing approvals: With financiers becoming more stringent about PPSA compliance, brokers should preemptively verify that their clients meet registration requirements before seeking approvals. This proactive approach can prevent delays and lost opportunities.
- Monitor legislative changes: The expansion of PPSA applications means that brokers must stay informed about legal updates and adjust their strategies accordingly.
- Leverage expert guidance: Given the complexity of PPSA compliance, brokers should consider partnering with experts like Simon Reed and PPS Advisory to navigate potential pitfalls effectively.
Conclusion
As 2025 unfolds, asset finance brokers must adapt to significant changes in the PPSA landscape. The expansion of security interest definitions, legislative updates, and enforcement challenges make it more critical than ever for brokers to understand and implement PPSR best practices. By staying ahead of these developments and actively guiding their clients, brokers can ensure smoother financing processes, mitigate risks, and position themselves as trusted advisors in an evolving financial environment.
