Key Takeaways
- • ASIC reviewed 24 wholesale and retail private credit funds with a combined $18 billion in assets under management between November 2025 and August 2026, according to the regulator's Report 846.
- • 88 per cent of advice files recommending portfolio allocations above 20 per cent to private credit failed to demonstrate compliance with the best interest duty, and one adviser recommended 87 per cent of a client's portfolio go into a single private credit fund.
- • Only two of 22 funds passed the full economic benefit of interest earned and borrower fees on to investors, while nine of 12 retail funds failed to clearly explain key information such as non-performing or distressed assets.
- • ASIC Commissioner Simone Constant called for "urgent action" from all participants in the private credit system, citing risks, fees and conflicts disclosure as priorities.
Summary
The Australian Securities and Investments Commission (ASIC) has released the results of its latest private credit surveillance, published as Report 846: Private Credit Funds: Do investors know what they are getting? The review covered 24 wholesale and retail private credit funds with a combined $18 billion in assets under management, alongside a sample of financial advice given to retail investors relating to private credit. The report follows an earlier review conducted last November.
On financial advice, ASIC found that while most reviewed advice demonstrated compliance with legal obligations, advisers recommending higher portfolio concentration to a single private credit fund were less likely to show compliance with the duty to act in the investor's best interest. Eighty-eight per cent of advice files recommending allocations above 20 per cent to private credit failed to demonstrate that compliance. ASIC highlighted one case in which an adviser recommended a client place 87 per cent of their portfolio into one private credit fund.
The surveillance identified several recurring concerns across the sector. ASIC observed complex structures and arrangements that masked conflicts and fees, including related-party arrangements, which may not have supported fair investor outcomes. Fee disclosure was incomplete or inconsistent, including with respect to which fees were retained by fund managers; only two of 22 funds passed the full economic benefit of interest earned and borrower fees to investors. In retail distribution, nine of 12 retail funds failed to clearly explain key information for investment decisions, such as non-performing or distressed assets.
ASIC Commissioner Simone Constant said private credit is no longer confined to institutional investors or high-net-worth individuals, and that growing retail and superannuation exposure makes strong gatekeeping more important. Constant said the regulator was encouraged by some industry efforts to lift practices and develop standards, but that those standards must be adopted and embedded across the sector. She added that the sector must be clear and transparent about risks, fees and conflicts, and that "urgent action" was needed from all participants in the private credit system. She also noted that in some parts of the market there have been more special purpose vehicles within a group than employees managing investors' money, making effective risk disclosure "near impossible."
On financial advice, ASIC found that while most reviewed advice demonstrated compliance with legal obligations, advisers recommending higher portfolio concentration to a single private credit fund were less likely to show compliance with the duty to act in the investor's best interest. Eighty-eight per cent of advice files recommending allocations above 20 per cent to private credit failed to demonstrate that compliance. ASIC highlighted one case in which an adviser recommended a client place 87 per cent of their portfolio into one private credit fund.
The surveillance identified several recurring concerns across the sector. ASIC observed complex structures and arrangements that masked conflicts and fees, including related-party arrangements, which may not have supported fair investor outcomes. Fee disclosure was incomplete or inconsistent, including with respect to which fees were retained by fund managers; only two of 22 funds passed the full economic benefit of interest earned and borrower fees to investors. In retail distribution, nine of 12 retail funds failed to clearly explain key information for investment decisions, such as non-performing or distressed assets.
ASIC Commissioner Simone Constant said private credit is no longer confined to institutional investors or high-net-worth individuals, and that growing retail and superannuation exposure makes strong gatekeeping more important. Constant said the regulator was encouraged by some industry efforts to lift practices and develop standards, but that those standards must be adopted and embedded across the sector. She added that the sector must be clear and transparent about risks, fees and conflicts, and that "urgent action" was needed from all participants in the private credit system. She also noted that in some parts of the market there have been more special purpose vehicles within a group than employees managing investors' money, making effective risk disclosure "near impossible."
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