Prospects for reform of the Scottish law of moveable property have improved slightly as the Scottish Parliament's Economy, Energy & Fair Work Committee invites views on Scottish Law Commission proposals designed to help businesses raise finance over their assets.
Published in December 2017, the Commission's Report on Moveable Transactions described the current Scottish law on using moveable property as security as "badly outdated, unclear and unduly restrictive", stating that it inhibits economic growth by making it harder for entrepreneurs to get the finance they need. Other countries, including England, have clearer and more modern legal regimes covering this area.
The report recommends creating a new type of loan security over moveable property, called a "statutory pledge", creating two new official registers, a Register of Statutory Pledges containing details of moveable goods, or intellectual property and other rights, used as security for a loan, and a Register of Assignations for information about obligations which had been transferred to a new owner.
Action by the Scottish Government on the report is still awaited, but the committee took evidence in November from a number of interested parties who argued that the law in this area needed updating, and Scotland’s businesses were suffering as a result.
In its call for views the committee seeks views on the following questions:
- Have difficulties raising finance on moveable goods in Scotland affected your business or area of activity? If so, what practical impact has this had?
- The Committee understands that there are various workarounds used by Scottish businesses to enable access to finance on moveable goods. Are these sufficient, or would the law benefit from being reformed?
- The Scottish Government will have to invest money in creating the two new registers recommended by the Scottish Law Commission. Do you think there is sufficient demand to justify this? Do you have any evidence to support this?
- The proposals in the Scottish Law Commission’s draft bill would apply to consumers as well as businesses. Do you think there are enough protections in place for consumers?
- Do you have comments on any of the other proposals contained in the draft bill?
- Do you agree with the Scottish Law Commission’s view that the law relating to moveable transactions should be changed?
- Do you have any other comments?
The Committee will consider the responses received and decide its next steps after the closing date for submissions, which is Friday 17 April 2020.