ASIC warns private credit sector on enforcement

• ASIC warned private credit firms to prepare for enforcement action over poor practices.
• The regulatory crackdown targets a local private credit market estimated at roughly $200 billion.
• The regulator cited ongoing concerns regarding unrealistic asset valuations, opaque fee structures, and governance failures.

The Australian Securities and Investments Commission announced it is moving past warnings to prepare enforcement action against non-compliant firms in Australia's $200 billion private credit sector.

The regulatory intervention follows 18 months of heightened surveillance across wholesale and retail funds after rapid industry growth outpaced corporate governance standards.

“We're now beyond warnings; the sector should prepare for enforcement action,” said ASIC Commissioner Simone Constant.

The regulator highlighted specific vulnerabilities in real estate lending, which accounts for 40% to 60% of the domestic private credit market.

The regulatory warning comes after property developer Bathla entered administration owing $3 billion to over 40 lenders.

ASIC stated that its ongoing surveillance continues to uncover systemic issues around fund liquidity, transparency, and conflicts of interest.

The market watchdog confirmed it will maintain active surveillance and pursue enforcement investigations to enforce proper valuation practices.