Inaccuracy in the RSP has four routes to correction, depending on the type of inaccuracy and whom it is that is applying for correction:
- Secured Creditor Correction
- Correction Demand Correction
- Court-Directed Correction
- Manifest Inaccuracy Correction
There are multiple routes to correction of inaccuracy in the RSP, depending on the type of inaccuracy and whom it is that is applying for correction.
Unlike the RoA, supervening events can, and will, cause the RSP to become inaccurate after a statutory pledge has been registered. In particular, statutory pledges can be discharged, otherwise extinguished, restricted, assigned and amended, all off-register.
A wide correction RSP correction regime is necessary to allow all types of inaccuracy to be corrected to maintain register accuracy, avoid parties appearing on the face of the register, and other third parties, being prejudiced against and to support the searching and correspondence regimes provided for under the 2023 Act.
The 2023 Act provides for four routes to correction:
- secured Creditor Correction (section 96(1))
- correction Demand Correction (section 98(6))
- court-directed Correction (section 101(1)(a))
- manifest Inaccuracy Correction (section 101(2)).
These correction routes collectively allow all inaccuracies in the register to be corrected, although such correction is largely voluntary.
It is, however, in the best interests of all prospective and existing users of the RSP, both borrowers and lenders, to ensure that the RSP represents as accurate a picture of current available finance as possible. Correction to reflect the off-register discharge of a registered statutory pledge, in particular, contributes significantly to maintaining register accuracy.
A low correction fee of £10 for Secured Creditor Corrections and Correction Demand Corrections is intended to encourage correction of the register and promote register accuracy, searchability and useability.
Background
Section 101(1) of the 2023 Act contains a definition of RSP inaccuracy:
“There is an “inaccuracy” in the Statutory Pledges Record where the record misstates what the position is, in law or in fact, in relation to a statutory pledge.”
Section 101(2) of the 2023 Act further provides that a correction of the Statutory Pledges Record:
“(a) may relate to an inaccuracy—
(i) which has existed since an entry in the record was made up, or
(ii) which has arisen due to circumstances that have occurred since the submission of the application in respect of which the entry was made up.”
Subsection (2)(a)(i) clarifies that a need for a correction may arise because the record has always been wrong.
By way of illustration, this would include:
- a typo made at the time of original registration
- an incorrect or incomplete name being given for the provider
- an incorrect document being submitted
- a frivolous or vexatious registered statutory pledge being identified.
Subsection (2)(a)(ii) clarifies that a need for a correction may arise because supervening facts have meant that the record has become wrong.
There are many ways in which a Statutory Pledges Record may become inaccurate after registration due to a supervening event having taken place.
Some events will be deed-related, for instance:
- a statutory pledge may be restricted or discharged off-register by written statement under section 59 of the 2023 Act
- a statutory pledge may be assigned off-register in accordance with section 57 of the 2023 Act
- a statutory pledge may be amended in accordance with section 58 of the 2023 Act but the amendment is unregistrable in terms of section 58(6).
Some events may not be deed-related, for instance, a statutory pledge may be extinguished off-register as a result of:
- the encumbered property being destroyed
- a purchaser of encumbered property acquiring that property unencumbered under one of the 2023 Act’s good faith acquisition rules
- a statutory pledge being enforced under section 64 of the 2023 Act (leading to mandatory correction by the secured creditor as a result of section 78(2) of that Act)
- the secured creditor acquiescing to the transfer of encumbered property under section 52 of the 2023 Act
- a secured creditor’s name or correspondence address details changing after the statutory pledge has been registered.
This section explains the statutory RSP correction processes provided for by both the 2023 Act and the 2024 Rules and details our approach to each route to RSP correction.
Approach to correction
With one exception, the 2023 Act provides for a wholly optional approach to RSP correction.
The one exception is where enforcement has extinguished a statutory pledge. In that instance, the secured creditor must apply for correction to remove the statutory pledge from the register (section 78(2) of the 2023 Act).
If you are the secured creditor for a registered statutory pledge which has been extinguished by virtue of the enforcement of the pledge, enforcement of any other secured right, or the enforcement of diligence, you are legally required to correct the register to remove that statutory pledge. You can correct the register to do this.
Otherwise, correction of the RSP is wholly optional.
It is in the best interests, however, of all prospective and existing users of the RSP, both borrowers and lenders, to ensure that the RSP represents as accurate a picture of current available finance as possible.
Updating the register to give effect to discharges and restrictions of registered statutory pledges is therefore particularly important.
A searcher of the register will wish to be able to establish whether party A has previously granted a statutory pledge over property B or not.
A prospective lender to party A may not lend if that search reveals existing borrowing over property B. Party A, in that case, may not be able to obtain required finance over property B.
Alternatively, post-search investigation may be required in order to determine whether a registered statutory pledge by party A over property B still exists or not. Enquiries of the registered secured creditor will be required.
The RSP correspondence regime introduced by the 2023 Act is impacted upon, however, where the register is not updated to give effect to an assignation from a registered secured creditor to a new secured creditor who then holds that security right off-register.
Updating the register to remove defunct statutory pledges, restrict existing statutory pledges and to reflect assignations has an important play in the ongoing accuracy and effectiveness of the RSP as a searchable public register and also promoting ease of access to available finance.