Beyond Warnings: ASIC’s Private Credit Crackdown and What It Means for Your Lending Operations
Regulators now expect provable, data-backed compliance. Here is how a purpose-built loan management system helps you deliver it.
Australia’s private credit sector has spent a decade in growth mode. It has now met a regulator that has run out of patience. ASIC has told the industry that multiple enforcement investigations are under way, that poor private credit practices are a 2026 enforcement priority, and that participants should prepare for action.[1][2][3] For lenders, the message is practical: the standards ASIC has set out must be evidenced, loan by loan and decision by decision.
From guidance to enforcement
ASIC’s escalation has been methodical. Clayton Utz describes a sequenced campaign that moved from commissioned research to thematic surveillance, then public guidance, enforcement action and now compliance directives with fixed deadlines.[4] In June, ASIC put funds on notice ahead of 30 June reporting, insisting that valuations be “current, accurate and grounded in realistic assumptions”.[1] It also confirmed that active surveillances across wholesale and retail funds are well progressed.[1]On 22 September, ASIC Commissioner Simone Constant went further, telling an industry gathering in Sydney that the regulator has moved beyond warnings and that the sector should prepare for enforcement action.[2][3] Funds that have not assessed themselves against ASIC’s ten principles were urged to ask why not, “before your investors do”.[2]The net is also wide. ASIC expects fund managers, underwriters, trustees, valuers, auditors and ratings agencies to meet their responsibilities,[3] and it has stressed that these obligations cannot be outsourced: everyone in the value chain, from origination through to audit, must play their part.[1] Action to date includes design and distribution stop orders against retail private credit products in 2025,[1] and civil penalty proceedings against platform trustees.[4]
The stress is starting to show
The collapse of NSW developer Bathla, which owed about A$3 billion to some 40 lenders when it entered administration, exposed how concentrated construction lending can ripple through private credit.[6] ASIC’s view is that this was not a surprise: it was weaknesses in the sector being tested at scale for the first time.[3]On 28 September, Metrics Credit Partners, which manages around A$40 billion, suspended trading in three ASX-listed funds after its auditor, KPMG, reached different conclusions on valuation inputs and probability weightings. Net tangible assets were marked down by 12.16%, 10.08% and 1.99% across the three funds.[5][6] Metrics has said it has no exposure to Bathla and pointed to interest-rate and macroeconomic conditions and heightened regulatory expectations as factors behind higher loan-loss provisions.[6] The episode is a reminder that valuation and provisioning judgements are now being tested hard, by auditors as well as regulators. There is a more measured view too. The Reserve Bank Governor has said the non-bank lending activity observed has not shown a systematic weakening of lending standards, and that any weakness would primarily be a problem for investors rather than a systemic one.[2] But ASIC has rejected the idea that Australia’s property-heavy portfolios are a shield. In the words of the Clayton Utz analysis, “Difference is not a defence.”[4]
What ASIC found: the red flags
In reviewing 28 retail and wholesale funds, ASIC reported findings that read like an audit checklist:[2]
· Only four funds published the interest rates or ranges charged to borrowers.
· Fewer than half had detailed written credit, impairment and default management policies.
· Most lacked adequate separation between those approving loans and those independently assessing ongoing performance and value.
· Of the wholesale funds, only two stress tested as part of liquidity risk management.
ASIC’s wider work also found inconsistent definitions of arrears, impairment, loan amendments and provisioning, which undermines comparability across funds, and uneven management of concentration risk across the market.[1] Commissioner Constant has also warned that carrying distressed loans at face value to protect fees is unacceptable.[3] Each of these findings is, at heart, a data and process problem.
The benchmark: ASIC’s Ten Principles
ASIC’s “Principles for private credit funds done well” cover stewardship, organisational capability, transparency, design and distribution, fees and costs, conflicts of interest, governance, valuations, liquidity and credit risk.[8] ASIC expects boards, auditors, responsible entities, trustees and chief investment officers to assess their practices against them and lift standards where needed.[1]The industry is organising around the same yardstick. The Private Credit Association of Australia, aiming to launch in December, plans to accredit managers against the ten principles with annual reviews, and to publish a comparison database covering arrears, defaults, impairments, fees, margins and liquidity arrangements.[7] Its transitional lead describes the goal as “a high set of standards the industry drives itself toward”.[7] The Financial Services Council released its own industry standard for private markets and private credit in August.[7] The direction of travel is clear: managers will be asked to show their practices, consistently and comparably.
Where your loan management system fits
The ten principles are governance commitments, but they are proven through records: credit decisions documented, exposures classified consistently, conflicts separated, reporting timely and traceable. That is where the loan management system (LMS) becomes a compliance asset rather than just an administration tool. LoanSphere is a cloud-based LMS built on the Salesforce platform, with its calculation engine hosted in AWS. It supports both regulated and non-regulated lenders and has supported more than $5 billion in originations and a $1.9 billion active portfolio. The table below shows how its capabilities align to the ASIC principles most relevant to lenders.
For regulated credit providers, the same platform supports responsible lending assessments with a full audit trail, suitability records, AFCA-aligned dispute case tracking, and suspicious matter flagging with case management, so that NCCP and AML/CTF obligations are met from the same source of truth.
Key takeaway Software does not make a lender compliant on its own. Governance, independent valuation and board oversight remain yours. But when the evidence ASIC and your auditors ask for is captured as part of everyday lending, the risk of non-compliance is significantly diminished. |
Five things to do now
1. Self-assess against the ten principles. Document the gaps, the owners and the remediation timeline.
2. Standardise your definitions. Apply one consistent approach to arrears, impairment, loan amendments and provisioning across every loan and report.[1][7]
3. Separate and evidence credit oversight. Make sure loan approval and independent performance review are distinct, documented steps.[2]
4. Stress-test concentration and liquidity. Look for single-developer and related-party exposure, and do not wait for formal defaults before reassessing asset values.[1]
5. Test your systems. Can you produce a complete audit trail, board reporting and investor-level disclosure quickly? If not, that is your priority.
ASIC has made clear that time is running short.[2][3] The lenders best placed are those who can demonstrate, not just assert, that their practices meet the standard.
See it in action Would you like to see how LoanSphere maps to your obligations? Click Here or email Sales@loansphere.com.au to arrange a discussion with our team. |
About LoanSphere. LoanSphere is a cloud-based loan management system supplied by Agro Business Pty Ltd (ABN 54 625 942 547), supporting regulated and non-regulated lenders. Important information. This article is general information only and is not legal, financial or compliance advice. LoanSphere is software; its use does not in itself ensure compliance with any law or regulatory expectation. Lenders should obtain their own professional advice. Information is current as at 30 September 2026.Why You Received this Email: You're receiving this email because you've previously engaged with LoanSphere or provided your details to us. This message was sent by Agro Business Pty Ltd (ABN 54 625 942 547), the supplier of LoanSphere. If you'd prefer not to receive further marketing emails from us, please email Sales@LoanSphere.com.au with the subject heading “Unsubscribe”. We'll action your request promptly and within five business days. You can also contact us at Sales@LoanSphere.com.au. We handle personal information in accordance with our Privacy Policy.
References
[1] ASIC (18 June 2026), ASIC puts private credit on notice, ahead of 30 June valuations and reporting. https://www.asic.gov.au/about-asic/news-centre/news-items/asic-puts-private-credit-on-notice-ahead-of-30-june-valuations-and-reporting
[2] David Taylor, ABC News (22 September 2026), Investor fears private credit mass exodus as ASIC cracks whip on lending standards. https://www.abc.net.au/news/2026-09-22/asic-lays-down-the-law-to-australian-private-credit-sector/107178192
[3] Riddhima Talwani, Financial Standard (22 September 2026), ‘Beyond warnings’: ASIC to come down heavy on private credit. https://www.financialstandard.com.au/news/beyond-warnings-asic-to-come-down-heavy-on-private-179814034
[4] Clayton Utz (30 June 2026), ASIC’s private credit escalation. https://www.claytonutz.com/insights/2026/june/asic-s-private-credit-escalation
[5] Alternative Credit Investor (28 September 2026), Australian lender Metrics suspends three funds. https://alternativecreditinvestor.com/2026/09/28/australian-lender-metrics-suspends-three-funds/
[6] Reuters (28 September 2026), Major Australian private lender suspends three ASX funds, cuts asset values after audit (syndicated). https://www.investing.com/news/stock-market-news/major-australian-private-lender-suspends-three-asx-funds-cuts-asset-values-after-audit-4919329
[7] Charlie Tchetchenian, The Adviser (29 September 2026), Private credit body takes shape as scrutiny intensifies. https://www.theadviser.com.au/compliance/48997-private-credit-body-takes-shape-as-scrutiny-intensifies
[8] ASIC (November 2025), Principles for private credit funds done well (Table 1.2, excerpt from REP 823, pp. 26–28). https://download.asic.gov.au/media/g4ydslky/rep-823-principles-for-private-credit-funds-done-well-pp26-28.pdf
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