ASIC private credit review prompts enforcement action over disclosure failures in Australia

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ASIC private credit disclosure review

Highlights

ASIC's review of 24 private credit funds managing A$18 billion between November 2025 and August 2026 led to six interim stop orders and multiple enforcement referrals.
Only two of 22 funds fully passed on interest and borrower fee benefits to investors, while many funds obscured conflicts and failed to provide clear fee disclosures.
Nine of 12 reviewed retail funds did not clearly explain exposure to non-performing assets, prompting ASIC to increase compliance and governance scrutiny on the sector.

Surveillance findings and regulatory response

As reported by ASIC, the regulator reviewed 24 wholesale and retail private credit funds between November 2025 and August 2026, covering a combined A$18 billion in assets under management, along with a sample of financial advice given to retail investors on private credit.

The surveillance finds that many of the weak practices identified in ASIC's first private credit report, released in November 2025, continue. The latest findings have led to several regulatory interventions, including six interim stop orders and multiple referrals for further enforcement investigation.

ASIC says complex structures and related-party arrangements continue to obscure conflicts and fees, potentially undermining fair outcomes for investors. It also finds incomplete or inconsistent fee disclosure, with only two of 22 funds passing on the full economic benefits of interest earned and borrower fees to investors.

The regulator also points to shortcomings in retail distribution, saying nine of 12 retail funds reviewed do not clearly explain key information needed for investor decisions, including exposure to non-performing or distressed assets. In its review of financial advice, ASIC says most advice examined appears to comply with legal obligations, but advisers recommending higher portfolio concentration to a single private credit fund are less likely to show compliance with their duty to act in the investor's best interest.

Market implications for private credit managers and investors

ASIC Commissioner Simone Constant says private credit is playing a growing role in the Australian economy, but practices have not improved in line with that growth. She says investors should not need forensic skills to understand how a fund operates, how their money is used, how risks and conflicts are managed, and whether decisions are being made in their interests.

Constant says the regulator has observed some improvement and welcomes efforts by parts of the industry to raise standards. However, she says urgency is now required across the sector as private credit is no longer limited to institutional investors and high-net-worth individuals, with more Australians gaining exposure through retail channels and superannuation.

The findings suggest compliance, disclosure and governance pressures are likely to intensify for fund managers, advisers and other gatekeepers active in private credit. ASIC says its focus is now on holding the sector accountable for persistent poor practices, while pushing firms to embed clearer and more transparent standards on risks, fees and conflicts.

Earlier, we reported that Menara Asia launched the Menarabena platform to connect construction buyers and suppliers with certification and compliance information.

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