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ASIC Advocates for Stronger Regulation in Private Lending

Addressing Inconsistencies and Risks in the Private Credit Market

ASIC Advocates for Stronger Regulation in Private Lending?w=400

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The Australian Securities and Investments Commission (ASIC) has recently highlighted the need for enhanced regulatory measures within the nation's private lending sector.
This call to action stems from findings that reveal inconsistencies and potential risks that could adversely affect both investors and borrowers.

ASIC's comprehensive review uncovered several concerning practices within the private lending industry. These include unclear reporting standards, downplayed risks, opaque fee structures, and conflicts of interest. Such issues not only undermine investor confidence but also pose significant risks to borrowers who may not fully understand the terms and conditions of their loans.

One of the primary concerns is the lack of transparency in interest rate differentials. ASIC found that while private credit retail funds delivered returns between 4% and 10% to investors, the same funds were charging borrowers interest rates ranging from 2.5% to a staggering 44.51%. This disparity raises questions about the fairness and ethical standards within the sector.

In response to these findings, ASIC has outlined several measures aimed at bringing the private lending industry in line with practices observed in the banking sector. These include implementing clearer reporting standards, enhancing risk disclosure, and establishing more transparent fee structures. The goal is to foster a more trustworthy and stable financial environment that protects all stakeholders involved.

ASIC's chairman, Joe Longo, emphasized the importance of collaboration between government and regulators to create a solid framework that allows markets to thrive while ensuring investor protection. He stated, "We want to encourage the market as a whole," underscoring the need for balanced regulation that supports growth without compromising integrity.

For SMEs considering private lending options, this development serves as a crucial reminder to conduct thorough due diligence. Business owners should seek clear and comprehensive information about loan terms, interest rates, and associated fees. Consulting with financial advisors or legal professionals can provide additional insights and help navigate the complexities of private lending agreements.

In conclusion, ASIC's call for stronger oversight in the private lending sector aims to address existing shortcomings and promote a more transparent and equitable financial landscape. By adhering to enhanced standards and practices, the industry can better serve the needs of both investors and borrowers, contributing to the overall health of Australia's economy.

Published:Tuesday, 6th Jan 2026
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

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Interest Rate Lock:
An agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage for a specified time period.