Regulatory update
ASIC’s second private credit review: investors still left in the dark
ASIC’s second major private credit surveillance has found that many poor practices on fees, disclosure, distribution and conflicts remain. Here’s what REP 846 found and what fund managers need to fix.
On 10 November 2026, ASIC released Report 846, Private credit funds: Do investors know what they are getting? It’s the regulator’s second major surveillance of private credit, following its first report in 2025.
ASIC’s conclusion is blunt. In its media release, it says many investors still aren’t getting the information they need to understand the risks, fees and conflicts in private credit investments. The review has already led to six interim stop orders and several referrals for enforcement investigation, and ASIC says its focus now is on holding the sector accountable.
Key takeaways
- ASIC reviewed 24 private credit funds with a combined $18 billion in assets under management, plus a sample of advice to retail investors.
- Many of the problems identified in ASIC’s first private credit report remain.
- Only 2 of 22 funds passed the full economic benefit of interest earned and borrower fees on to investors.
- 9 of 12 retail funds didn’t clearly explain key information, such as non-performing or distressed assets.
- The review has led to six interim stop orders since September and several enforcement referrals.
On this page
What ASIC reviewed
Between November 2025 and August 2026, ASIC reviewed 24 wholesale and retail private credit funds, responsible for a combined $18 billion in assets under management. It also reviewed a sample of financial advice given to retail investors about private credit.
The findings are set out in REP 846. ASIC says that while there are pockets of improvement, many of the poor fee, disclosure, distribution and conflict practices identified in its first private credit report remain.
What ASIC found
| Issue | What ASIC found |
|---|---|
| Structures and conflicts | Complex structures and arrangements that masked conflicts and fees, including related-party arrangements that may not have supported fair investor outcomes |
| Fees | Incomplete or inconsistent fee disclosure, including which fees fund managers kept. Only 2 of 22 funds passed on the full economic benefit of interest earned and borrower fees |
| Retail distribution | 9 of 12 retail funds failed to clearly explain key information for investor decisions, such as non-performing or distressed assets |
| Financial advice | Most advice reviewed complied, but advisers recommending a higher concentration in a single private credit fund were less likely to show they had met the best interests duty |
Complexity that hides risk
ASIC Commissioner Simone Constant said investors shouldn’t need forensic skills to understand how a fund operates. She noted that in some parts of private credit, ASIC has seen more special purpose vehicles within a group than employees managing investors’ money. At that point, she said, effective disclosure of risks becomes near impossible.
Related parties are still the warning sign
Across both the funds and the advice files, related-party dealings and the potential for conflicting interests were again warning signs of a higher risk of poor conduct and poor outcomes.
Enforcement so far
Poor practice in private credit is one of ASIC’s 2026 enforcement priorities. ASIC says it has several well-progressed enforcement investigations under way, and that this surveillance has produced a number of enforcement referrals and interim stop orders, including against:
- Fidante Partners Limited
- Australian Secure Capital Fund
- Melbourne Securities Corporation Limited (three stop orders)
- Murdoch Clarke Mortgage Management Ltd.
ASIC says those stop orders were lifted once the issues were promptly addressed. Separately, ASIC made interim stop orders against two Angas Securities funds yesterday over PDS and Bathla Group disclosure. We wrote about the earlier Fidante stop order in October.
What fund managers should do now
ASIC has said it has made good practice clear through its guidance, including its ten principles of private credit done well, and that it now expects the sector to adopt them. If you’re a responsible entity, trustee or investment manager of a private credit fund, we recommend you:
- map your structure. If investors can’t follow how money moves through your special purpose vehicles and related parties, simplify it or explain it far better
- show every fee. Disclose clearly which fees, margins and borrower charges the manager keeps, and how interest earned is shared with investors
- manage conflicts properly. Review related-party arrangements against ASIC’s updated RG 181 on managing conflicts of interest
- tell investors about problem loans. Retail investors should be able to see non-performing and distressed assets, and what they mean for returns and liquidity
- check your obligations. ASIC’s catalogue of key legal obligations for private credit funds is a useful checklist
- review your target market determination and distribution channels, particularly where retail investors and superannuation are involved.
Questions for your board
- Could an ordinary investor follow how our fund is structured and who is paid what?
- Do investors receive the full benefit of interest and borrower fees, and if not, is that clearly disclosed?
- How are related-party transactions approved, priced and disclosed?
- Do our PDS and reports show non-performing and distressed loans clearly and promptly?
- Would we be comfortable if ASIC reviewed our fund under REP 846 tomorrow?
For financial advisers
ASIC found that most of the advice it reviewed complied with the law. But where advisers recommended a high concentration in a single private credit fund, they were less likely to show they’d acted in the client’s best interests. If you recommend private credit, document why the concentration suits the client, and look closely at any related-party links between the fund and your licensee.
Our licensing and design and distribution obligations teams can help you review your disclosure, governance and advice processes.
Frequently asked questions
What is REP 846?
ASIC’s report on its second major surveillance of private credit, released on 10 November 2026. It covers 24 funds with $18 billion in assets under management, and a sample of advice to retail investors.
What were ASIC’s main concerns?
Complex structures that masked conflicts and fees, incomplete or inconsistent fee disclosure, retail distribution that didn’t clearly explain risks such as distressed assets, and advice recommending high concentration in a single fund.
How many stop orders has ASIC issued?
ASIC says it has issued six interim stop orders since September 2026 as a result of this work, alongside several referrals for enforcement investigation.
Does this only affect retail funds?
No. ASIC reviewed both wholesale and retail funds, and its next steps cover the whole sector, including responsible entities, wholesale trustees, investment managers, distributors, advisers, valuers and auditors.
Running or distributing a private credit fund?
Talk to our banking and financial services team
Banking & Financial Services Law
Our team can review your structure, fee disclosure and conflicts framework against ASIC’s expectations, update your PDS and target market determination, and help you respond if ASIC comes asking.
This article is general information only and is not legal advice. Please contact us for advice about your circumstances.
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