'Absolutely fed up': ASIC slams $250 billion private credit sector
It's not for lack of trying, but ASIC is furious with the private credit sector's seeming indifference toward to the regulator's attempt to crack down on poor lending practices.
The private credit sector in Australia has come under heavy criticism from the Australian Securities and Investments Commission (ASIC) for its lax approach to regulating poor lending practices. ASIC's frustration with the sector's indifference to addressing these issues is understandable, given the significant role private credit plays in funding property development and construction.
The regulator's concerns revolve around the opaque nature of private credit finances, which leaves investors unaware of the risks associated with their investments. ASIC's latest surveillance report, the second major review of the sector, found that many investors are still not provided with adequate information to understand the risks, fees, and conflicts inherent in private credit investments.
Between November 2025 and August 2026, ASIC examined 24 wholesale and retail private credit funds, managing a total of $18 billion in assets under management. The watchdog also assessed financial advice given to retail investors on private credit investments. Despite ASIC's previous report in November 2025 highlighting several poor fee, disclosure, distribution, and conflict management practices, the regulator found that these issues persist.
ASIC has taken several regulatory actions, including issuing six interim stop orders and referring multiple cases for further investigation. However, the growing size of the private credit sector means that any instability could have a ripple effect on the broader financial system. Recent examples include the limited access to funds in private credit firms, leading to investor redemptions, as seen with CVS Lane, a lender that had significant loans tied to the collapsed Bathla developer.
The United States has been a leading example of private credit's potential pitfalls, with firms like Blue Owl facing scrutiny and redemptions due to poorly performing investments linked to traditional tech companies and the rise of artificial intelligence. ASIC has been actively enforcing the rules, issuing interim stop orders against companies, such as Angas Securities, for inadequate disclosure of their financial positions and exposure to risky investments like the Bathla Group.
In response to ASIC's concerns and recent events, industry bodies like the Alternative Investment Management Association (AIMA) and its private credit affiliate, the Alternative Credit Council (ACC), have released new guidance for Australian private credit managers. The guidance aims to strengthen governance, lending standards, transparency, and investor protection.
However, despite these efforts, ASIC's reviews have identified persistent weaknesses in the industry that need to be addressed. The regulator's frustration is evident, as the private credit sector is a crucial pillar of the Australian economy, and most Australians are exposed to its risks.
Written by urgent.news from ABC News AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
