Daily London
Australia’s burgeoning private credit sector has today been put on notice after the corporate watchdog found some lenders were covering up loan losses.
The Australian Securities and Investments Commission (ASIC) is worried about the lack of clarity in the country’s rapidly expanding $200 billion private credit sector.
Retail investors are at risk from loan defaults which could also impact the wider economy, the regulator says.
Concerns by ASIC come in a report based on the “surveillance” of 28 retail and wholesale funds between last October and August.
It revealed potential shortfalls by private lenders, including unclear reporting and terms; a lack of transparency about fees and interest rate margins; inadequate credit risk management; and weak governance.
The regulator has put forward proposals it wants to see adopted by the private credit industry, including clearer reporting of loan defaults to give investors an accurate picture of how funds are performing.
ASIC highlighted big differences between lenders in the standard of default reporting.
”We are concerned that private credit fund reporting may not provide investors with a true reflection of non-performing and distressed fund assets,” it said.
ASIC chair Joe Longo said most developed countries were grappling with the same changes and that there were major opportunities for Australia.
“This roadmap lays out the choices and future of Australia’s markets. We want our markets – private and public – to grow,” he said.
“That growth means stronger businesses, more jobs and a boost to our economy.
“Strong markets have strong market integrity.
“We want to lay the foundations for managed investment schemes and private markets to sustainably thrive for the future benefit of business and investors.”
