Given recent regulatory developments within the Australian private credit sector, we felt it important to share our views to provide clarity and reassurance.
1 October 2025
Given recent regulatory developments within the Australian private credit sector, we felt it important to share our views to provide clarity and reassurance. The sector has been the subject of heightened public commentary following the release of ASIC’s latest review, and as private credit plays an increasingly important role in client portfolios, we believe our perspective will help place these developments into context.
ASIC Report and Key Findings
The Australian private credit sector is presently subject to an in-depth regulatory review conducted by ASIC, which has shared its findings with the public via the publication of a detailed report (REP 814) entitled Private Credit in Australia (9 September 2025). The report recognises the vital and growing role private credit plays in complementing bank lending and providing funding diversity across the financial system, while also highlighting areas where governance, disclosure, and operational practices can be improved. We view these recommendations as part of a broader effort to set higher industry standards, which should support a stronger, more resilient private credit market as the sector continues to expand.
Sector Concentration Risks
A key theme from ASIC’s review relates to the concentration of lending within the real estate construction and development segment, accounting for approximately half of the estimated $200 billion market. While this area provides opportunities, it also introduces elevated risks given high construction costs, subdued commercial property values, and the presence of less experienced capital providers.
Transparency and Governance
ASIC identified shortcomings in disclosure standards, valuation methodologies and reporting practices across some funds, while also noting that asset managers serving institutional investors, including superannuation funds and family offices, often demonstrate more robust governance frameworks. Importantly, we see these regulatory observations as constructive as by raising the bar on transparency and disclosure, the regulator is supporting a healthier, more sustainable market environment for both investors and borrowers.
Heightened Regulatory Action
In tandem with the report’s release, ASIC’s enforcement activities have intensified. Temporary stop orders were placed on several private credit funds, reflecting increased regulatory surveillance and real action. Additionally, Lonsec recently downgraded several private credit funds amid governance and transparency issues. These developments reinforce the need for rigorous due diligence, stronger governance frameworks, and enhanced transparency from private credit fund managers.
Vantage’s Approach to Private Credit
At Vantage, our private credit allocations focus on funds with robust diversification beyond real estate, important to mitigate concentration risks. On the rare occasions where compelling, single asset real estate-backed opportunities arise, we reserve these exclusively for experienced clients with relevant property market expertise. Each investment is reviewed on a deal-by-deal basis to ensure close alignment with the individual investor’s objectives and risk profiles
The ASIC insights underscore the value of our disciplined and selective approach to private credit investment. We conduct comprehensive due diligence on all manager partnerships, requiring full transparency over holdings, valuation processes, and fee structures. The Vantage Investment Team also engages frequently with the portfolio managers (typically on a quarterly basis) to monitor underlying exposures and adherence to stated processes. This rigorous approach ensures that where private credit is included, it is done so selectively and with appropriate safeguards.
Role in Client Portfolios
Vantage continues to believe private credit can serve as an important diversifying component in client portfolios. Just as equities span a spectrum from defensive businesses with steady earnings and dividends to more speculative companies with volatile share prices, private credit too covers a wide risk–return range.
Alongside diversification benefits, private credit offers attractive income yields in a modest interest rate environment, low correlation to listed markets, and access to opportunities not typically available in public markets. When carefully selected and managed, private credit can provide both resilience and incremental return potential within long-term portfolios.
Conclusion
We regard ASIC’s inquiry on the Australian private credit industry as a constructive development that will ultimately enhance the quality and durability of the sector. An awareness within the sector of stronger governance, improved transparency, and more consistent disclosure standard monitoring will benefit investors and improve confidence in the asset class. Combined with our selective approach, we believe this creates an opportunity for clients to access well-diversified private credit strategies that contribute meaningfully to portfolio diversification and income generation, with risks well managed and understood.
* This article contains purely factual information and/or general advice and does not constitute personal financial product advice. The content of this article does not take into account your personal objectives, financial situation or needs and you must determine whether it is appropriate to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.
About the Author:
Anthony Nguyen – Head of Investments – Vantage Wealth Management
Anthony commenced his career in the financial services industry in 2018, bringing a strong educational background to his role. He holds a Bachelor of Commerce from the University of Western Australia and a Master of Finance from Curtin University, where he received the Curtin School of Economics and Finance Head of School Prize for graduating at the top of his class. He has also successfully passed the CFA Level 2 exam.
As the Head of Investment at Vantage Wealth Management, Anthony is responsible for overseeing investment due diligence, investment governance and portfolio management of the Vantage Managed Accounts. He is an integral member of both the Vantage Investment Team and the Vantage Investment Committee.
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