ASIC’s Enforcement Era: How Australia’s Private Credit Sector Is Being Forced to Grow Up

From Principles to Enforcement

The Australian Securities and Investments Commission has moved decisively from consultation to enforcement in its oversight of the private credit sector. In November 2025, ASIC announced that poor private credit practices would be one of its formal 2026 enforcement priorities, marking the first time the regulator has named the sector as a standalone enforcement target. The message to fund managers was unambiguous: the era of light-touch oversight is over.

The REP 814 Findings

The foundation for ASIC’s enforcement posture was laid in September 2025 with the release of Report 814, the regulator’s first comprehensive review of private credit in Australia. REP 814 identified both strengths and significant shortcomings across the sector, estimating the market at around $200 billion at the time of publication.

Among the most concerning findings: many funds lacked written credit or impairment policies, raising doubts about whether credit risk was being properly managed across the market. ASIC also flagged opaque fee structures and interest margins, weak governance and conflicts of interest, poor valuation and liquidity practices, and inadequate separation between loan approval and valuation oversight.

The report found that funds reported low default levels of 0–6 per cent but used inconsistent definitions of “default” and “loan security,” potentially masking true portfolio risks. This definitional inconsistency is particularly problematic because it prevents investors and regulators from making meaningful comparisons across funds.

Stop Orders and Enforcement Actions

ASIC has backed its rhetoric with action. In October 2026, the regulator issued an interim stop order against Australian Secure Capital Fund Limited, preventing the company from offering units in three registered managed investment schemes. The order arose from ASIC’s surveillance of private credit funds and focused on how the products were being distributed to retail investors.

This was not an isolated action. Earlier stop orders in September 2025 had signaled the regulator’s willingness to intervene, and ASIC Commissioner Simone Constant has stated that “high standards were essential in private credit, which refers to lending by non-bank funds directly to borrowers”. The regulator has also conducted on-site visits and document searches, signaling a more intrusive supervisory approach.

The Data Gap Problem

One of ASIC’s most significant challenges is that it lacks the data it needs to supervise the private credit sector effectively. The regulator has acknowledged that it lags international peers in the breadth, depth, and frequency of data it can access on private capital funds. To address this, ASIC intends to conduct a pilot in the 2026–27 financial year to access improved funds management data and calibrate baseline data needs across the sector.

This data gap is not merely an administrative inconvenience. Without reliable, standardised data, ASIC cannot identify emerging risks, compare fund performance, or detect misconduct at scale. The pilot represents a critical step toward closing this gap, but it will take time to yield results.

Industry Response and the FSC Standard

The private credit industry has responded to regulatory pressure with its own governance initiatives. In August 2026, the Financial Services Council released a mandatory private-markets standard for its funds management members, with the new requirements set to take effect on 1 July 2027. The standard formally defines private credit, introduces clearer and more consistent rules for valuing investments, and requires reassessment when necessary.

Whether voluntary industry standards can move fast enough to restore investor confidence remains uncertain. ASIC has made clear that it will continue surveillance of private credit funds offered to retail investors, covering products distributed both directly and through advised channels. The regulator has also signaled that it will pursue enforcement action for breaches of law and deter future misconduct.