Why ASIC Has Put Australia's Private Credit Market on Notice
What is private credit?
Private credit is lending by funds and other non-bank lenders, financed by investors rather than bank deposits, to businesses and property developers who borrow outside the traditional banking system. ASIC estimates the Australian market at around A$200 billion, with real estate making up 40 to 60 per cent of lending, and the investors behind it range from superannuation funds and insurers to a growing number of individuals investing through retail and wholesale funds.
Why is ASIC worried about private credit?
ASIC's concern is that the sector has grown faster than its governance, valuation and disclosure practices. Its September 2025 review of the market found that many funds lacked regular independent valuations, that terms such as "senior debt" and "investment grade" were used inconsistently, and that undisclosed remuneration, including fees paid by borrowers and kept by managers, could be three to five times the publicly disclosed management fee.
The regulator has since raised its tone. ASIC Commissioner Simone Constant told a Sydney property finance summit on 22 September 2026 that "governance, controls and underwriting standards have not kept pace with this growth", and that "the time to strengthen standards is now before there is a loss of trust". In the same speech on standards, she pointed to the Bathla group, where she said A$3.4 billion had moved through around 540 special purpose vehicles, as an example of how complex structures can obscure where investor money ends up.
ASIC has also moved from warnings to direct intervention. On the same day as Constant's speech, it issued interim stop orders preventing three private credit products under the Remara Cash Management Fund from being offered to retail investors, citing a target market that allowed the products to make up as much as 75 per cent of an investor's portfolio and described them as suitable for investors focused on preserving capital. ASIC had earlier issued stop orders against the RELI Capital Mortgage Fund and Australian Credit Funds.
Ahead of the 30 June 2026 reporting date, ASIC also called on funds to ensure their loan valuations were current, accurate and based on realistic assumptions. It has set out ten principles for private credit and expects every manager to assess its fund against them, with Constant telling the industry that if it has not adopted them, it should ask "why not?"
Is private credit riskier for individual investors than for super funds?
The same loans can carry very different levels of protection depending on who holds them. ASIC's 2025 review found that large institutional investors generally receive better disclosure and governance than investors in wholesale and retail funds, and it identified growing retail exposure, particularly to construction lending, as the area of greatest opacity and investor risk.
Liquidity is a large part of that difference. Super funds can hold loans to maturity and diversify across many managers, while individual investors in a fund offering monthly or quarterly redemptions may find that the fund is backed by property loans running for several years. ASIC has also warned that steady monthly distributions can look inconsistent with how much cash a fund is actually collecting, particularly in construction finance where interest is often added to the loan balance rather than paid.
What should I check before investing in a private credit fund?
The most useful starting point is whether the manager has assessed its fund against ASIC's ten principles, since Constant has said that a manager unable or unwilling to answer that question is "the first red flag". Beyond that, ASIC's surveillance of 28 private credit funds found that only four published the interest rates their borrowers were paying, fewer than half had detailed policies for managing defaults, and only two wholesale funds had stress-tested their liquidity, according to findings Constant highlighted for advisers in September 2026.
In practice, that means asking how loans are valued and by whom, what fees borrowers pay and who keeps them, how much interest is being capitalised rather than received in cash, how many loans are in arrears, and how the fund would handle redemptions if many investors asked for their money back at once. A fund that cannot explain its structure in plain terms, particularly one that relies on multiple special purpose vehicles or related-party arrangements, deserves extra scrutiny, and NonPublic's guide to private market risks covers the wider considerations.
NonPublic Pty Ltd (ABN 49 607 216 928) holds Australian Financial Services Licence #482668. Investments are available to wholesale and sophisticated investors as defined under the Corporations Act 2001. This content is general in nature and does not constitute financial product advice. It does not take into account your objectives, financial situation, or needs. Investing in private markets involves significant risk, including the potential loss of your entire investment. Past performance is not a reliable indicator of future results. You should obtain independent financial advice before making any investment decision.
