ASIC draws line in the sand on private credit

By the Editorial Team · Tuesday, September 22, 2026

The Australian Securities & Investments Commission has warned private credit firms that failure to improve valuation, transparency, and governance standards could lead to enforcement actions. This marks a shift from advisory to regulatory scrutiny, with ASIC demanding clearer reporting and stronger oversight to protect investors and ensure market integrity following recent sector stress and high-profile collapses.

The Australian corporate regulator has issued a stern warning to the private credit sector, signaling a shift from advisory guidance to potential enforcement actions if the industry fails to raise its standards. Speaking at an event in Sydney on Tuesday, Simone Constant, Commissioner of the Australian Securities & Investments Commission (ASIC), highlighted ongoing issues within the sector related to valuations, liquidity, governance, conflicts of interest, and transparency.

The recent collapse of Sydney developer Bathla Group, which entered administration last month with debts totaling $3.4 billion, illustrates the risks associated with inadequate oversight and poor valuation practices. Constant described the emerging signs of strain as a "line in the sand" for private credit. While acknowledging the sector's important role in supporting Australia's economic growth and productivity, she emphasized that such contributions depend on the adherence to high standards and best practice principles.

ASIC has been urging improvements across the private credit industry for over a year but now intends to move beyond warnings. The regulator expects to see enhanced compliance following its June 30 directive on valuations, with a broader focus on overall practices. Constant underscored the need for greater transparency from fund managers, specifically requiring clear reporting on borrower arrears, investor capitalisation, developer exposures, and precise protocols governing redemption queues.

Institutional investors and superannuation trustees also face increased scrutiny, as ASIC calls on them to exercise thorough due diligence rather than accepting manager valuations at face value. Constant pointed out that trustees have statutory responsibilities to act in the best financial interests of their members, which necessitates rigorous, transparent assessments of private credit investments.

In addition, the corporate regulator highlighted the critical role of valuers, auditors, and ratings agencies in maintaining market integrity. These entities must ensure valuations accurately reflect underlying risks and provide investors with reliable information to make informed decisions.

The statement from ASIC reflects growing regulatory concern over private credit's evolving role as an alternative fixed-income investment. The regulator's proactive stance signals increased oversight and a readiness to pursue enforcement action should industry participants fail to address identified shortcomings.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.