A new catalogue from the regulator has provided both retail and wholesale private credit funds with a summary of their key legal obligations.
The Australian Securities and Investments Commission (ASIC) has released a catalogue summarising the key legal obligations and regulatory guidance for private credit operators, as part of the work flagged in its roadmap for capital markets.
Private credit has recently come under heightened scrutiny from ASIC, with poor practices and predatory behaviour identified among its key enforcement priorities for 2026.
This came after the regulator urged the industry to lift standards, following a major review.
The regulator hopes the catalogue will help provide private credit operators with a “practical reference point”, with an ultimate aim to “enhance trust and integrity” in the sector.
However, ASIC did note the catalogue did not contain all applicable obligations and is not intended to be used as a substitute for legal advice.
Obligations and regulations
ASIC’s catalogue outlines obligations for operators of both retail and wholesale funds.
Typically, retail funds tend to be open to everyday investors – through managed funds or platforms – while wholesale funds are generally restricted to sophisticated or professional investors who meet wealth or income thresholds.
Under the Corporations Act (Act), retail and wholesale funds must comply with the following:
- Do all things necessary to ensure that AFS covered by the licence are provided efficiently, honestly, and fairly.
- Have in place adequate arrangements for the management of conflicts of interest.
- Comply with conditions on the AFS licence.
- Comply with financial services laws.
- Have adequate resources to provide those financial services.
- Maintain competence to provide financial services covered by the licence.
- Have adequate risk management systems.
Retail funds must also comply with the following responsible entity duties:
- Act honestly.
- Exercise care and diligence.
- Act in the best interests of members and to prioritise members’ interests if they conflict with a responsible entity’s own interests.
- Comply with the scheme’s compliance plan.
- Ensure scheme property is valued at regular intervals.
The full catalogue is available for download on ASIC’s website.
Sector under scrutiny
Private credit operators have been in the regulator’s crosshairs in 2025.
At the start of November, ASIC unveiled its roadmap, Advancing Australia’s Evolving Capital Markets (REP 823), with a warning that private markets will need to clean up the deficiencies exposed in recent surveillance.
Specifically, ASIC flagged the heavy concentration of real estate lending in Australia’s private credit market, particularly in higher-risk construction and development, along with transparency gaps, opaque fees, and governance shortcomings.
When outlining the roadmap, ASIC chair Joe Longo said efforts to heighten standards across the sector presented significant opportunities.
“We want our markets – private and public – to grow. That growth means stronger businesses, more jobs and a boost to our economy,” he said.
“Strong markets have strong market integrity. We want to lay the foundations for managed investment schemes and private markets to sustainably thrive for the future benefit of business and investors.
“We see enormous opportunity for public and private markets to thrive and grow together especially as they embrace new technology and innovation.
“At the heart of this roadmap is a clear message, that Australia and ASIC want to be backers, not blockers of investment and capital.”
Speaking to The Adviser for a feature in its November magazine, Paul Chiu, director of brokerage CLAS Financial Solutions, said that as the private credit market evolves and regulatory scrutiny increases, structured and sophisticated funds would be best positioned to deliver solutions that complement traditional finance.
“There are a lot of operators in the market,” Chiu said.
“Those with a strong track record over the last few years will continue to flourish. Newcomers chasing quick profits will likely disappear. We’ll see mergers, consolidation, and supply-demand dynamics weeding out weaker players.”
Chiu also urged brokers to sharpen their understanding of the market and the lenders they partner with.
“Ring around, get as much info as you can from your colleague or your peers in the finance working industry, especially those that do fit in the commercial space, just to get their perspective as brokers,” Chiu added.
“We are peers and what one person experiences might not be unique. It might be a very common thing. So definitely ring around, ask around and do your research.”
[Related links: Lift standards or face stronger action, ASIC tells private lenders]
