From October 2024 to August 2025, the Australian Securities & Investments Commission (ASIC) surveilled 28 private credit funds, including listed and unlisted funds, and retail and wholesale investor funds. In ASIC Report 820: Private credit surveillance report: Retail and wholesale surveillance dated 5 November 2025 (ASIC Report 820), ASIC outlines the better and poorer practices being undertaken in the market in respect of key risk areas.
The table below briefly summaries the key takeaways of ASIC Report 820 and sets out ASIC’s expectations and findings on private credit funds. To meet best practice industry standards, fund managers, responsible entities, trustees and platforms that operate in the private credit space should consider the outcomes of ASIC Report 820.
Link to ASIC Report – REP 820 Private credit surveillance report: Retail and wholesale surveillance | ASIC
| Key Risk Area | Better Practices | Case study of better practices | Poorer Practices | Why is best practice important? |
| Fund disclosure and transparency | Clear and effective disclosure of fund strategies. Comprehensive reporting to investors in quarterly investor reports. Clear explanation of key terms such as Loan-to-Value Ratio (LVR). | One fund disclosed that it invested in asset-backed securities and detailed the relevant tranche and the associated ranking and risk implications. | Unclear investment strategies. Vague descriptions of fund assets. Poor quality and variability in reporting to investors. | Investors have access to timely, transparent information about portfolio strategy, exposures, risks and fees, enabling comparisons. |
| Marketing and distribution | Wholesale fund operators have adequate compliance arrangements and resources in place to ensure fund units are marketed and distributed only to wholesale clients. | Continuing to directly distribute products even though a substantial proportion of the fund’s loans were in default and investor redemptions had frozen. | Design and distributions practices are fair, transparent and appropriately targeted for investors. | |
| Fee and income transparency | Passing on income.Fee and income transparency. | One wholesale fund passed on to investors the entirety of any ‘excess’ income from underlying investments generated above the target return (including borrower fees) as a distribution or increase to the fund’s overall Net Asset Value (NAV). | Retention of loan origination and other fees (e.g. loan extension, restructure or roll-over fees). Failure to pass on default fees. Failure to disclose substantial fees and income. | Fees and income structures are fair and transparent, giving investors and borrowers a clear of total costs. |
| Governance and conflict management | Active communication with fund trustees. Responsible Entity (RE) committee oversight of performance and liquidity. Clearly documented Conflict Of Interest (COI) arrangements. Independent committees. Related party transactions and COI approvals. | One fund had in place the appropriate controls for managing COIs that could arise when investing in debt and equity of an asset that was held by different funds or accounts. For example, the COI was fully disclosed to prospective and existing investors and a separate Special Purpose Vehicle (SPV) was established to hold the equity interest. | Limited RE engagement with underlying funds. Retention and non-disclosure of revenue from loans under management. Non-disclosure of related party transactions. Debt and equity investments overseen by the same investment committee. | REs and trustees act as stewards of investor capital, ensuring that their decisions are fair and in investors’ best interests. Structures, processes and people promote sound decision making, compliance and accountability. Conflict of interests are identified, disclosed and effectively managed or avoided. |
| Valuation | Monthly valuations and unit pricing. Transparent valuation policies. Valuation and impairment disclosures. | Two wholesale funds disclosed in monthly reports to investors, the markdown of impaired loans in a reporting period as a proportion of the portfolio, along with a rationale for the markdown, or the proportion of the loan book subject to enhanced monitoring or workout. | Opaque valuation practices such as not disclosing monthly fund values to investors. Valuation review only in response to credit triggers. Misaligned valuation frequency for master and feeder funds. | Valuations are fair, timely and transparent with robust governance. |
| Liquidity management | Liquidity plans and frequent stress testing. Clear explanation of potential liquidity risk impact. | Many funds implemented responsible and appropriate liquidity management plans, including frequent stress testing and contingency planning. One fund carried out weekly stress tests for all of its loan investments. | Absent stress testing. Of the wholesale funds, only two performed stress testing. No liquidity policy. One wholesale fund did not have a liquidity policy in place and did not describe liquidity risk in detail in its offer document. Side letters with unequal redemption rights and distribution rates. | Liquidity risk is effectively disclosed and managed, avoiding structural mismatches, with fair redemption terms aligned with portfolio liquidity. |
| Credit risk management | Detailed credit assessments. Enhanced due diligence for development loans. | Nine funds had investment managers that prepared credit memorandums for each proposed lending arrangement, including analysis of the borrower’s financials. | Limited credit assessments. One wholesale fund did not request, obtain or analyse the assets and liabilities of borrowers as a usual practice. No internal credit risk rating or scoring process. Poor record-keeping | Credit risk is effectively managed across loan origination, portfolio construction, monitoring, impairment, default and repayment. |