'Absolutely fed up': ASIC slams $250 billion private credit sector

It is not for lack of trying, but ASIC is furious with the private credit sector's seeming indifference to the regulator's attempt to crack down on poor lending practices.

The corporate cop's anger is understandable too. Private credit has issued hundreds of billions of dollars of funds, and its lending practices fuel property development and construction.

Private credit refers to lending outside the banking sector.

Central to ASIC's concerns is the opaque nature of the sector's finances.

It means investors remain in the dark on the risks of private credit investments.

"I am absolutely fed up, at ASIC we are absolutely fed up," ASIC commissioner Simone Constant said.

ASIC has today released its second major surveillance of private credit in Australia.

"We have drawn a line in the sand with a second comprehensive broad and deep surveillance report," Ms Constant said.

The watchdog's second major surveillance report of the sector found "complex structures, opacity and deficient disclosure practices persist".

Between November 2025 and August 2026, ASIC reviewed 24 wholesale and retail private credit funds responsible for a combined $18 billion in assets under management.

It also ran the ruler over a sample of financial advice given to retail investors relating to private credit.

ASIC's surveillance found that many of the poor fee, disclosure, distribution and conflict management practices identified in ASIC's first private credit report, released in November 2025, remain.

It's not for lack of intervention by the corporate regulator.

ASIC has initiated several regulatory interventions, including six interim stop orders and multiple referrals for further enforcement investigation.

Private credit stress intensifying

The problem for ASIC is that private credit is growing, and any wobbles in the sector have the potential to fracture the broader financial system.

We've seen tremors recently in the sector when investors access to their funds in private credit firms have been limited.

Investor redemptions are when investors in private credit firms seek to retrieve some, or all, of their money in the face of concerns about the safety of their investment because of potentially overly risky lending.

Private lender CVS Lane, which had significant loans to collapsed developer Bathla, limited investor redemptions this year.

The US has been ground zero for private credit.

It hit the headlines this year when US private credit firm Blue Owl had to limit the amount of money investors could withdraw as the company bled value from souring software investments.

The firm's two private credit funds again faced elevated redemptions, investors seeking to withdraw cash, in the June quarter.

Private credit was exposed to traditional software firms, and the exponential growth of artificial intelligence left those firms reeling, prompting investors to pull their money out of credit linked to traditional tech.

Regulators have found monitoring the sector difficult because the disclosure requirements are not anything like what you find in the banking sector.

But ASIC has been making a point of pulling firms over who do not follow the rules.

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The regulator this week, for example, made interim stop orders preventing Angas Securities Limited (Angas Securities) from offering interests in two managed investment schemes over concerns the funds' product disclosure statements do not adequately disclose Angas Securities' financial position, and one fund's exposure to the Bathla Group.

ASIC is concerned that investors in both funds may not have been adequately informed about the financial position of Angas Securities and the risks arising from that position.

Alternative investment industry standards

Coinciding with ASIC's report, the Alternative Investment Management Association (AIMA) and its private credit affiliate, the Alternative Credit Council (ACC), released new guidance for Australian private credit managers, setting out recommended practices to "strengthen governance, lending standards, transparency and investor protection".

AIMA's managing director and head of Australia, Michael Gallagher, said the guidance represented an important industry response to the concerns raised by ASIC and recent events.

"We believe private credit plays a crucial role in financing Australian businesses and supporting Australia's productivity, a contribution former ASIC chair Joe Longo has repeatedly recognised," he said.

No wonder the corporate regulator's frustrated — an emerging key pillar of finance is clearly not up snuff, and most Australians are exposed.