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ASIC report sparks industry call for stronger governance
Industry bodies have welcomed ASIC’s interim private credit report, signalling a push for stronger governance and clearer standards across the sector.
In separate statements on Monday, both the Financial Services Council (FSC) and the Australian Investment Council welcomed the findings of the ASIC-commissioned report into private credit.
CEO of the FSC, Blake Briggs, acknowledged the issues ASIC identified – including opaque remuneration and fee structures, related party transactions, valuation practices, and inconsistent disclosure terminology – and said: “ASIC’s private credit report is a timely call for greater transparency in the sector, which the FSC and mature operators in the industry support.
“The FSC will work with the experienced and industry leading operators in our membership, in consultation with ASIC, to develop consistent standards that enhance governance and disclosure practices in private credit and private markets more broadly.”
The FSC’s approach, he noted, seeks to build consumer trust and support the long-term growth and stability of Australia’s capital markets, while ensuring private markets continue to deliver strong outcomes for investors and the broader economy.
“Private capital fills a funding gap for innovative Australian start-ups, growing businesses and property and infrastructure projects. It also provides diversification, return and income opportunities for Australians through superannuation and retail investments,” Briggs said.
Australian Investment Council CEO Navleen Prasad said: “We commend ASIC for the approach they have taken in consulting with industry and in publishing the report by Mr Williams and Mr Timbs.”
She noted the report “affirms that many market participants, particularly at the institutional end, already adhere to good practices”, while providing “that much-needed next level of clarity about where ASIC sees a need for improvement”.
Like Briggs, Prasad also highlighted the sector’s role in funding innovation and growth.
“Private capital is the source of crucial investment into start-ups and growth businesses. It drives innovation, employment and competition across the entire economy,” she said.
Noting private credit’s significant growth, Prasad said it is timely to review practices that may not serve investors or the market and to ensure clear guardrails that balance investor protection, market confidence, and growth.
“This report gives industry bodies a solid point of reference to coalesce around to explore appropriate guardrails. The council welcomes the opportunity to work with other industry bodies in the coming months on this,” she said.
Earlier this year, in its submission to the regulator’s capital markets discussion paper published in February, the FSC pushed back against any additional regulatory burden on APRA-regulated super funds, telling ASIC they should retain maximum flexibility to allocate capital across public and private markets to deliver strong retirement outcomes.
“The FSC recommends that any regulatory enhancements for retail investors should not apply to APRA-regulated superannuation funds and other institutional investors,” the FSC said as part of its 67 recommendations and noted that funds are already subject to a “high degree” of regulation.
The council, however, acknowledged that a regulatory framework allowing super funds to invest in private markets, aligned with APRA’s SPS 530 and strengthened disclosure on liquidity risks and performance, would be beneficial.
The ASIC-commissioned report, released on Monday, found room for improvement in how superannuation funds access private credit, warning that smaller funds are disadvantaged compared with larger ones.
AUTHOR
Maja Garaca Djurdjevic
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