Private credit reforms: ASIC’s REP 823 and REP 820 raise the bar

ASIC has made good on its September commitment to “name what good looks like” in private credit. Hot on the heels of its capital markets roadmap (REP 823), the regulator has released its private credit surveillance report (REP 820). Together, these documents mark a decisive end to the era of light-touch oversight for wholesale and retail private credit funds.

Here, we break down the key takeaways from both releases – with a particular focus on REP 820 – and outline what fund managers, responsible entities, platform operators and superannuation trustees need to do next.

Key messages at a glance

• ASIC’s review found the sector lacks consistent, well-established practices, especially in governance and transparency, fees, treatment of net interest margins, valuation methodologies, and conflicts, liquidity and credit management.

• While “better practice” examples exist, ASIC is clear: voluntary improvement is too slow.

• Prepare for more intrusive data requests, targeted stop orders, and enforcement where standards fall short.

• The November capital markets roadmap (REP 823) signals structural reform, with new reporting, audit and notification obligations for wholesale funds – not just another supervisory campaign.

What REP 820 tells us

Good practice highlights:

• Independent, quarterly loan-level valuations, subject to audit.

• Full disclosure of all forms of remuneration – including borrower-paid fees and spread capture – as a percentage of fund assets.

• Board-level oversight of related-party transactions, with genuine independence, contemporaneous minutes and transparent investor reporting

• Liquidity frameworks stress-tested and aligned to asset tenor and realistic redemption horizons.

Red flags:

• Opaque fee models: some managers retaining 50-100% of borrower "establishment”, “arrangement" and/or "work-out" fees for themselves with no investor disclosure.

• Valuations “by spreadsheet”: infrequent, internal, and unsupported by market evidence, especially for construction loans.

• Marketing glossing over payment-in-kind (PIK) interest, capitalised distributions, and concentration risks.

• Loose or inconsistent terminology – “senior”, “investment grade”, “security” – used without reference to any recognised standard.

Regulatory bite: ASIC is already acting on these findings, linking REP 820 to recent stop-orders against retail private credit. Investigations into “more egregious conduct” are underway.

REP 823 – the bigger picture for Australia's capital markets

ASIC’s REP 823, “Roadmap for Capital Markets”, complements REP 820 and sets the stage for lasting change. REP 823 distils industry feedback, examines the broader capital markets construct, and outlines ASIC’s regulatory priorities, including those for private markets and private credit. Key private market initiatives include:

• A notification regime for wholesale managed investment schemes, giving ASIC visibility over previously “dark” funds.

• Mandatory data lodgements surveillance of audited financials.

• A 2026 refresh of core guidance (including RG 45, RG 181, RG 182) to embed REP 820 and REP 823 outcomes.

• Enhanced focus on transparency and data collection in private markets, including improved reporting on fund composition, risk exposures, and valuation methodologies. The call for data collection may mirror the approach taken by APRA in collecting superannuation data, which it uses to improve member outcomes by maintaining appropriate regulatory oversight and increasing transparency.

• Stronger governance and oversight requirements, particularly around conflicts of interest, related-party transactions, and board independence.

• Alignment of Australian private market practices with international standards, with ASIC signalling it will benchmark local requirements against global best practice to ensure competitiveness and investor confidence.

In addition, in its media release (25-264MR), ASIC has also stated it will:

• issue a catalogue that summarises fund managers’ legal obligations and related ASIC regulatory guidance;

• refresh funds management regulatory guidance on a targeted basis; and

• engage with industry bodies as they work to enhance industry standards, with a clear warning that regulation will follow if industry self-help stalls. The Financial Services Council has already taken the first step to announce that it proposes to work with ASIC and the industry to develop consistent standards that enhance governance and disclosure practices in private credit and private markets more broadly (which is consistent with the approach taken by the FSC in developing best practice principles for superannuation platform investment governance).

The industry should be bracing for a targeted, multipronged uplift in regulatory guidance, expectations and enforcement.

Implications for fund managers, trustees and platforms

ASIC’s REP 820 sets out ten guiding principles for private credit participants – responsible entities, trustees, and investment managers – emphasising the need for a holistic uplift in standards across the sector. Fund managers, trustees and platforms should:

1.Stewardship and governance

Act as stewards of investor capital, ensuring decisions are fair and in investors’ best interests.

Establish well-defined, documented roles, decision-making and escalation processes, and embed a culture of risk-awareness, compliance and transparency.

2. Organisational capability

Maintain adequate human, financial and technological resources, with regular reviews as fund size and complexity grow.

Undertake appropriate monitoring and supervision, including of corporate authorised representatives.

3. Transparency

Provide timely, transparent information on investment strategy, exposures, valuations, risks and fees.

4. Design and distribution

Ensure product design and distribution practices are fair, transparent and appropriately targeted for investors.

5. Fees and costs

Disclose all fees and income streams (eg. management and performance fees, borrower-paid fees, origination margins, default interest).

6. Conflicts of interest

Identify, disclose, and effectively manage or avoid conflicts of interest.

7. Valuations

Implement clear and consistent valuation methodologies, policies and processes that produce fair valuations.

8. Liquidity management

Effectively disclose and manage liquidity risk, avoiding structural mismatches, with fair redemption terms aligned to portfolio liquidity.

9. Credit risk management

Apply standardised credit assessment and monitoring frameworks as part of a well-governed and documented risk management framework.

10. Platforms and super trustees

Distributor due diligence must address the REP 820 themes – documentation, valuations, conflicts, liquidity, and credit risk – with ongoing monitoring.

Superannuation trustees and platforms operators should review their investment governance and due diligence processes to ensure alignment with ASIC’s heightened expectations for private market exposures. The focus on private credit coincides with a time when superannuation trustees and platform operators are keenly reviewing practices following the industry uplift which is taking place in respect to investment governance in the platforms sector.

ASIC’s REP 823 also recommends legislative reform, stating that the legal framework for wholesale funds needs enhancing to lift integrity and investor protection. In particular, ASIC has put forward reforms regarding statutory duties, and notification and reporting requirements for trustees of unregistered managed investment schemes which would reflect those currently applying to responsible entities of registered managed investment schemes. ASIC also recommends increasing the current financial thresholds of the wholesale client test and requiring responsible entities and trustees to notify ASIC and investors of significant events, including suspension of redemptions.

What good looks like – ASIC’s emerging principles

While formal guidance is due next year, REP 820 points to ten emerging pillars of “compliant private credit”, echoing the good-practice table in REP 814:

• Independent, frequent valuations.

• Comprehensive, loan-level reporting.

• Full remuneration transparency.

• Robust conflict and related-party governance.

• Clear, consistent terminology.

• Stress-tested liquidity frameworks.

• Equitable investor treatment.

• Documented credit and impairment policies.

• Board composition that ensures independence and expertise.

• Alignment with global best practice (AIC, ILPA, FSB liquidity guidance).