Private credit reforms: from principles to enforcement

The reform agenda for private credit has crossed a threshold. Within the space of a few weeks in late 2025, ASIC delivered three things it had been telegraphing since September: a rewritten conflicts management guide (the updated RG 181, released 16 December), a compliance catalogue which set out key legal obligations for private credit funds (Catalogue), and – through its 2026 enforcement priorities – formal notice that poor private credit practices are now a named enforcement target. In parallel, the FSC is developing best practice standards for platform governance. But a critical gap remains: there is no clear industry body producing binding standards that target the conduct of the fund managers themselves. The window to self-remediate is narrowing. Here, we unpack these developments and what they mean in practice.

Key messages at a glance

• RG 181 rewrites the conflicts playbook. The first update since 2004, with private market-specific examples drawn directly from REP 820 findings. This is not aspirational guidance – it is the standard ASIC will enforce against.

• Industry standards are the sector’s last chance to self-regulate. The FSC’s work targets platform trustees and gatekeepers. AIMA’s Alternative Credit Council has published voluntary guides. However, no single industry body is developing binding standards for the specialist private credit fund managers whose conduct REP 820 scrutinised. That fragmentation strengthens ASIC’s hand if it decides legislative reform is needed.

• Enforcement is live. ASIC has doubled investigations, nearly doubled court filings, issued multiple stop orders and allocated 40-plus staff to the Shield and First Guardian matters alone. Wholesale fee structures and retail distribution are the 2026 surveillance priorities. Funds are advised to take note of Sarah Court's enforcement record

• For fund managers, RG 181 and ASIC enforcement are the binding constraints. The FSC platform standards will shape how gatekeepers assess and monitor private credit products – which in turn will impose market discipline on managers. But the direct regulatory benchmark is the updated RG 181, read alongside REP 820 and the Catalogue. That is where ASIC will test conflicts frameworks, fee disclosures and valuation governance.

The updated RG 181: a new conflicts baseline

The 2004 guidance that RG 181 replaces pre-dated the Royal Commission, the FOFA reforms, and the explosive growth of private credit. The new version is materially more detailed and directive. Three features stand out for the sector:

• Private market examples. The illustrative scenarios are thinly veiled descriptions of conduct ASIC identified in REP 820: related-party lending between affiliated funds, retention of borrower-paid establishment and arrangement fees, differential investor treatment via side letters, and conflicts arising in vertically integrated structures. These are the scenarios ASIC will test in its 2026 surveillance.

• Prescriptive, not just principled. ASIC describes a “proportionate and risk-based approach,” but the specificity leaves little room for static conflict registers reviewed annually. Licensees are expected to demonstrate systematic identification, categorisation and escalation of conflicts, with board-level oversight and contemporaneous documentation.

• A compliance roadmap in the appendix. RG 181 now includes a non-exhaustive catalogue of related obligations spanning the Corporations Act, ASIC guides, APRA prudential standards and case law. Read alongside the Catalogue released on 9 December 2025, this creates a comprehensive cross-referenced map that ASIC will expect licensees to have internalised.

Industry standards: progress on platforms, silence on fund managers

ASIC’s REP 814 called on the industry to demonstrate credible self-regulation. The FSC has responded – but its work addresses the gatekeeping end of the value chain, not the fund managers whose practices REP 820 found wanting.

Platform governance principles. Triggered by the Shield and First Guardian collapses, the FSC is developing best practice principles for superannuation platform trustees’ investment governance – covering onboarding, ongoing monitoring, and remedial action for investment menu options. APRA’s October 2025 thematic review letter reinforced this focus. These standards will shape how platforms decide which private credit products to list and retain, imposing indirect discipline on managers.

Private Markets Best Practice Standards. Separately, the FSC’s Private Markets Working Group is consulting on broader standards covering fee and income transparency, valuation governance, conflicts management and liquidity risk management. A draft standard is in member consultation with finalisation targeted for mid-2026. But the FSC’s membership is predominantly platforms, superannuation funds and large diversified asset managers. Many of the specialist private credit fund managers ASIC surveilled in REP 820 are not FSC members, leaving significant parts of the sector outside the FSC’s influence.

That gap matters. ASIC Chair Joe Longo has said publicly that law reform is not required “at this point,” provided the sector acts. That conditional language is deliberate. It preserves ASIC’s option to pursue legislative reform – wholesale fund notification requirements, statutory duties for trustees of unregistered schemes, revised wholesale client thresholds – if the industry’s response is judged insufficient. The longer the sector remains fragmented on self-regulation, with credible work on the gatekeeping side but no single voice for fund managers, the easier it becomes for ASIC to conclude that voluntary reform has run its course.

ASIC’s 2026 enforcement and surveillance pivot

Deputy Chair Sarah Court’s address at the ASIC Annual Forum left no ambiguity: “We won’t hesitate to take enforcement action to stamp out misconduct in the sector.” Private credit joins misleading pricing, financial reporting misconduct and insurance claims handling as a named 2026 priority.

The 2026 surveillance will concentrate on two areas:

• Wholesale funds: fees, margin structures and conflict management, with a particular focus on real estate lending – the segment where REP 820 found some of the most concerning practices, including managers retaining 50–100% of borrower fees without disclosure.

• Retail distribution: distribution of private credit funds through direct and advised channels. REP 820 found that few retail funds required financial advice as a condition of investment, despite advisers being described as a key distribution channel. Research houses – whose ratings significantly influence adviser recommendations and platform onboarding – are also in scope.

Chair Longo’s January 2026 risk outlook reinforced the point, identifying expanding retail access to private credit as one of 11 critical flashpoints. With investment thresholds as low as $2,000 now available through platforms and super products, ASIC’s concern about mis-selling and decision-making without adequate disclosure has sharpened further.

How we can help

Our multidisciplinary Financial Services Regulatory, Litigation and Risk Advisory teams are assisting managers, trustees and platform operators to conduct reviews against the updated RG 181; benchmark against better practices against REP 820; design fee transparency, valuation and liquidity frameworks; prepare board and investor disclosure packs; and respond to ASIC surveillance and enforcement action.