Proposed Bank Act Amendments to Resolve PPSA Priority Issues

New federal legislation was proposed in late 2011 to amend the Bank Act. The amendments pertain to determining priorities established under that legislation as compared to those arising pursuant to a provincial regime, such as found in Ontario’s Personal Property Security Act. The proposed amendments would give Bank Act securities priority over unperfected interests that exist at the time the Bank Act security is acquired, regardless of whether the unperfected interest was acquired earlier. There would be an exception in cases where a bank has knowledge of the existing unperfected PPSA interest. The proposed amendment, found in Bill S-5 (Financial System Review Act), has passed third reading in the Senate and is awaiting first reading in the House of Commons.