Australia: Private Credit–Public Interest?

By: Jim Bulling, Ben Kneebush and Thais Fernandes

In February this year, ASIC released a discussion paper seeking industry engagement on actionable ideas to enhance the operation of both public and private markets.

On 22 September 2025, ASIC released Report 814 which, among other things, identified better and poorer practices and areas for industry and regulator attention. The report highlighted four key areas of concern, being: 1) conflicts of interest, 2) fees and remuneration, 3) portfolio transparency and valuations, and 4) terminology. To address these areas of concern, the report identified a number of best practices:

• Fees – full disclosure of all fees and remuneration received by the manager in connection with the fund including quantification of amounts (e.g. percentage commission of the assets invested and bonus);
  
• Valuations – conducting valuations of assets at least quarterly by an independent third party;
  
• Portfolio Disclosure – detailed disclosure of loan and portfolio information on a quarterly basis;
  
• Liquidity – fulsome disclosure of the prospect of liquidity and the mechanisms of redemption including timing, exit pricing and valuations;
  
• Related Party Transactions – no related party transactions or, where they occur, review and sign-off of price and terms by an independent third party;
  
• Leverage – the use of leverage is adequately disclosed to investors along with the fund’s relevant policies and guidelines;
  
• Governance – having an independent trustee of the fund manager or independent directors on the board of the responsible entity;
  
• Investor Treatment – same fees as well as terms and conditions offered to investors in the same fund;
  
• Distributions – the nature of distribution payments should be clearly set out in regular investor reports; and
  
• Definitions – clear, concise, and consistent use of terms such as ‘investment grade,’ ‘security,’ ‘loan to value ratio’ and ‘senior debt.’

ASIC Enforcement

This report comes at the same time as ASIC has issued several interim stop orders against private credit funds for failures to adequately define the target market in the Target Market Determination (TMD). These enforcement actions provide insights into ASIC’s regulatory focus for private credit TMDs. In addition to these areas of concern identified above, ASIC seems to be focused on:

• Clear and accurate definition of risk levels for the fund;
  
• Appropriate portfolio allocation given the risks of the fund, including with regard to the preservation of capital;
  
• Adequate specification of investment timeframes for retail clients; and
  
• Suitable arrangements to prevent investors from holding a greater allocation than what is appropriate.

Next Steps

ASIC has committed to release in November this year a series of guidance material, including ASIC’s response to the earlier discussion paper, results from private credit surveillance and expert reports on the industry. Following that, ASIC has indicated that it will release a regulatory guidance catalogue to assist the funds management sector to more easily identify and comply with existing regulatory obligations.

We are following the developments in the private credit sector closely and will continue to update you on any developments.