Over the past year ASIC has made it very clear that private credit is now squarely on the radar. The recent surveillance and reports into responsible lending and fundraising practices in the private markets space read, at times, like a cautionary tale. For anyone working inside the industry, it all feels very familiar: great managers doing the right thing for borrowers and investors, sitting alongside operators who probably shouldn’t be anywhere near other people’s money.
There’s a perception that private credit is the “wild, wild west” of finance – opaque structures, hefty fees, and documents written to favour the house. That caricature exists for a reason. When capital is plentiful and regulation is light‑touch, you get behaviour ranging from sloppy to outright predatory. But that’s not the full story, and frankly it does a disservice to the lenders and managers who run tight risk frameworks, invest in proper credit work, and actually care about borrower outcomes.
The truth is that private capital has become a permanent and important part of the funding stack, both here and overseas. In the US and Europe, large parts of the corporate and real estate sectors are now effectively funded by non‑bank lenders. In Australia, we’re heading in the same direction. Banks are constrained by capital rules and risk weightings, and that leaves a gap for private lenders to step in with more tailored solutions. Done well, that’s a good thing: businesses get flexible capital, projects get built, and investors get yield in a world where government bonds barely move the needle.
That’s why, for those of us who take risk seriously, ASIC’s recent focus is not something to fear. It’s overdue. Good private credit managers already behave as if they’re under a much tougher regime than what’s written down. They stress‑test deals, they say no often, and they give borrowers clear, fair documentation. The problem is that borrowers can’t always tell the difference between those groups and the ones cutting corners until it’s too late. More consistent regulation and disclosure levels the playing field and makes quality more visible.
Of course, there’s another side to this. Globally, the sheer size and growth rate of private credit brings its own systemic risks. These are often long‑dated, illiquid exposures with complex intercreditor arrangements and limited secondary markets. The opacity that makes it attractive for some investors also makes it harder for regulators to see where the real concentrations and correlations sit. You can patch up disclosure here and tighten a guideline there, but you can’t rewrite the fact that a lot of risk has migrated out of the regulated banking system into vehicles that live in the shadows.
So is it “too little, too late” for some markets? Hard to say. In the US, for example, private credit has gone from niche to mainstream at speed. When that much leverage builds up outside traditional channels, you don’t usually get a gentle unwind. Whether it’s a proper crash or just a long, grinding period of disappointing returns, history suggests we will eventually find the weak hands and sloppy underwriting decisions that only reveal themselves when the tide goes out.
In Australia, we still have a window to get this right. ASIC leaning in now is a positive sign, not a threat. If we embrace higher standards – on disclosure, conflicts, valuation, and borrower treatment – we can build a private credit market that is deep, trusted, and sustainable. Borrowers deserve to know that “non‑bank” doesn’t mean “no rules”. Investors deserve to know that the return they’re being paid matches the true risk, not just the marketing slide.
Regulation won’t eliminate bad behaviour, but it will make it harder to hide. And for the private capital partners who already run exemplary shops, that’s a welcome development. They don’t need a wild west to compete. They just need a playing field where quality actually counts.