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Lenders are concerned about the size and practices of Australia’s booming private credit market, according to a new survey.
More than two in three lenders (69 per cent) are concerned about the size and practices of Australia’s fast-growing private credit market, according to new research released by commercial property finance group Stamford Capital Debt Markets this week.
A “lack of compliance and regulation in the non-bank lending space” was also identified as a major concern in the 2025 Debt Capital Markets Survey, which featured data from 100 respondents, including major banks, non-banks, private lenders, and second-tier trading banks.
Unsurprisingly, the number of lenders concerned with the private credit market was highest among the banks (86 per cent); however, 60 per cent of non-bank lenders in the survey also shared the view.
The survey also indicated rising demand, with 97 per cent of all lenders reportedly planning to increase the size of the loan book.
Overall, almost half (49 per cent) of respondents called for increased oversight and regulation of non-bank lenders. Top issues identified by respondents included “pushy practices, inexperienced operators and the sheer volume of players entering the market”.
Peter O’Connor, managing director at Stamford Capital, acknowledged the survey’s results, but said private capital still has an important role to play.
“Private credit fills a critical gap in the market, and there is potential for heavy-handed oversight to stifle the sector’s growth,” he said.
“While concern is elevating around the lack of compliance and regulation in the non-bank lending space, we do deal with many established and sophisticated counterparts in the non-bank space.”
New v established operators
One dynamic reflected in the survey’s results, as said by Stamford Capital, was the distinction between the established non-bank players and the newer, less experienced entrants.
Australia’s private lending market reached $148.6 billion in assets under management (AUM) in 2024, according to figures from the Australian Securities and Investments Commission (ASIC) – almost three times as much as it was a decade ago ($57.1 billion AUM in 2014) – and growing demand has fuelled a rise in private and non-bank lenders.
Newer market entrants make the market more competitive, but this level of inexperience can also present risks, according to Cory Bannister, senior vice-president and chief lending officer at La Trobe Financial.
“The recent increase of new participants in the private credit sector offers creditworthy borrowers suitable financial options, however it does carry potential risks,” Bannister said.
“If these businesses are not sufficiently experienced and capitalised and maintain inadequate standards, it could lead to adverse consumer outcomes and negatively impact the reputation of the private sector overall. We view longevity in the sector as a prized asset.”
Sector under scrutiny
Private credit has recently come under scrutiny as part of ASIC’s review into private markets, after warnings issued by the regulator that “failures are on the horizon”.
In its response to the ASIC review, the Australian Banking Association (ABA) said it expects private credit to “continue to grow and potentially compete with traditional banks in some asset classes, given the substantial capital that needs to be deployed”.
“It will be important to ensure there is a level playing field for public and private participants, to the extent that private credit directly competes with public markets as source of capital,” the ABA submissions said.
“As such, we support enhanced transparency and reporting standards to allow for effective monitoring and to assist with protection of retail and wholesale investors.”
The ABA submission also said that areas for focus should be provisions for stressed loans, fund-level liquidity, and better transparency on fees and charges.
“Enhancing transparency and reporting standards would help improve confidence in private markets and help to better understand the risks inherent in private credit and private market funds, by allowing for effective monitoring and improving retail and wholesale investor protections,” the submission said.
[Related: Private lending transparency under scrutiny in ASIC review]
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