ASIC to Expose Risks in Private Credit Sector, Focuses on Valuations, Fee Disclosures, and Liquidity.

ASIC prepares to expose risks in private credit sector, highlighting unattractive practices and inviting industry feedback on standards. The report will focus on areas like valuations, fee disclosures, and liquidity. ASIC chair Joe Longo aims to encourage high standards without imposing prescriptive rules, focusing on market-driven best practices. The regulator is particularly interested in how superannuation money is being used to invest in the private credit market, with a focus on ensuring members are protected.

The Australian Securities and Investments Commission (ASIC) is set to release a progress report on the private credit sector in September, highlighting concerns and inviting industry feedback on improving standards. Speaking at King & Wood Mallesons’ Digital Future Summit 2025, ASIC chair Joe Longo emphasized that the report will identify unattractive practices and encourage market-driven best practices.

The report will focus on key areas such as valuations, fee disclosures, and liquidity. Longo stated that ASIC aims to encourage high standards without imposing prescriptive rules. Instead, the regulator will rely on insights from its surveillance activities and industry input to identify best practices.

Longo also expressed interest in understanding how superannuation money is being used to invest in the private credit market. He noted that a significant portion of ASX-listed companies is now invested in private markets, raising public interest in transparency and member protection.

The report is expected to be followed by a more comprehensive one in November, addressing issues raised in the regulator's February discussion paper. Longo acknowledged that the exact next steps are still unclear but hinted at ongoing reforms in public markets and potential corporate law reforms.

This initiative underscores ASIC's commitment to ensuring the private credit sector operates with high standards and transparency, particularly in the use of superannuation funds.

References:
[1] https://www.investordaily.com.au/markets/57621-asic-prepares-to-expose-risks-in-fast-growing-private-credit-sector