(23 September 2025 – Australia) ASIC has released the interim report from its review into Australia’s A$200 billion private credit market which it believes could pose a systemic risk if a downturn were to occur.
A report published by the Australian Securities and Investments Commission (ASIC) found the Australian private credit market operates below international standards and may be a systemic risk for self-managed super funds. Heightened scrutiny on the sector is exemplified by ASIC enforcing stop orders on funds run by La Trobe Financial and RELI Capital, which it said was a result of its increased surveillance of the industry. Ratings agency Lonsec downgraded funds offered by Metrics Credit Partners also, one of the largest players in private credit.
Private credit, which the ASIC report says is broad and tricky to define, is the fastest growing and most lucrative area of funds management and while it continues to play a crucial role in capital markets, Australia must implement industry standards that align with international best practice.
“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. When an industry agrees on clear standards, it shows a strong commitment to doing things right and we welcome the industry’s commitment to leading this work. They need to act decisively” commented ASIC Chair Joe Longo.
“Thinking about private credit business models, there is a question about the stability, during a downturn, of remuneration structures that derive a majority of their income from borrower and other non-investor-paid fees. Unsustainable business models may ultimately have an impact on fund management and investor outcomes in a decline” the report states.
“The concentration of private credit in Australia in real estate construction and development finance may present as a systemic risk for small and self-managed superannuation funds and sophisticated investors in a downturn. Despite high sub-investment grade exposure, and higher-risk real estate construction and development financing, some funds report no impairments. This is surprising and inconsistent with rating agency expectation.”