ASIC has urged Australia’s private credit industry to strengthen governance and transparency, warning that some practices fall short of legal and market expectations.
The call comes as private credit grows rapidly to become a $200 billion sector, according to ASIC’s latest report (REP 814).
“Private credit is playing an important role in our capital markets and Australia should implement industry standards that align with international best practice,” ASIC chair Joe Longo (pictured) said in a media release.
“Enhanced standards are needed to lift practices across the sector. They will help promote confidence, improve market integrity and empower investors to make informed decisions.”
The report, commissioned by ASIC and led by Richard Timbs and Nigel Williams, assessed Australia’s private credit funds sector. It highlighted both positive practices and concerning behaviours requiring urgent address, including:
“While the report highlights some encouraging practices, it also reveals concerning behaviours that fall short of market expectations and more importantly that are inconsistent with existing financial services law,” Longo said.
He added that ASIC “expects meaningful action in response to these findings and will not hesitate to intervene where progress falls short.”
The insights reinforce ASIC’s earlier surveillance work, which led to stop orders against funds including RELI Capital Mortgage Fund and La Trobe’s US Private Credit and Australian Credit Funds. ASIC said promoting confident and informed participation in private credit markets is a “shared responsibility.”
The Financial Services Council (FSC) has welcomed the regulator’s findings, pledging to work with members and ASIC to establish consistent governance and disclosure standards.
“ASIC’s private credit report is a timely call for greater transparency in the sector, which the FSC and mature operators in the industry support,” FSC CEO Blake Briggs said in a media release.
“The FSC will work with the experienced and industry leading operators in our membership, in consultation with ASIC, to develop consistent standards that enhance governance and disclosure practices in private credit and private markets more broadly.”
Briggs also emphasised the sector’s importance: “Private capital fills a funding gap for innovative Australian start-ups, growing businesses, and property and infrastructure projects. It also provides diversification, return and income opportunities for Australians through superannuation and retail investments.”
ASIC will publish its full response in November, including guidance on key principles, additional research and insights, and its regulatory roadmap for both public and private markets.
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