Researcher Lonsec has come out in support of ASIC’s recent report into private credit distribution, backing key concerns raised by the regulator.
ASIC released Report 814 Private credit in Australia last month which called for a lift in standards across Australia’s private credit sector, highlighting several areas requiring improvement covering conflicts of interest, fees and remuneration, portfolio transparency and valuations, and terminology used.
Report 814 was released as an interim report as part of ASIC’s work on the sector that commenced earlier this year with the release of a discussion paper on the regulation of public and private markets.
Lonsec said the core of the regulator’s concerns in the interim report – fees, related-party exposures or conflicts of interest, valuation practices, liquidity, and investor disclosure – match the researcher’s “seven-factor” ratings model used to screen products.
“REP 814 highlights the sector’s growing importance and the need to lift standards around governance and transparency,” Lonsec deputy director of research Darrell Clark said.
“Lonsec’s research process already aligns closely with these principles, supporting advisers in identifying well-structured, high-quality products.”
Retail distribution of private market products – including private credit – will be scrutinised at the Professional Planner Researcher Forum in December.
Lonsec’s commentary comes as ASIC announced another interim stop order this week against two classes of the TruePillars Investment fund.
ASIC said it was concerned the product disclosure statements of the fund might be omitting information about the investments; that the fund didn’t adequately disclose the types of conflicts of interest that may be expected to occur in the management of the product; and that it failed to adequately disclose significant risks associated with an investment in the fund including liquidity, withdrawals and valuation.
Furthermore, the fund may be failing to adequately disclose the fees and costs of the fund, and that documentation contained misleading statements about income distributions, loss reserves, liquidity, risk and withdrawals.
The fund had net assets of approximately $14.6 million, as of 30 June 2025.
The stop order follows other recent actions by ASIC against La Trobe and RELI Capital, which coincided with the release of Report 814.
ASIC commenced interim product stop orders against the La Trobe US Private Credit Fund, the 12 Month Term Account and 2 Year Account Australian Credit Fund products, and the RELI Capital Mortgage Fund in September.
The stop orders against La Trobe’s Australian Credit Funds were lifted on 24 September, while the stop order on the US Private Credit Fund was lifted on 1 October.
The target market determinations (TMDs) of the Australian credit funds were updated to state an appropriate allocation was 25 per cent rather than 50 per cent.
The product has also introduced distribution conditions, including a questionnaire that will be used by La Trobe to identify whether investors applying for interests in the products are in the revised target markets.
The US private credit fund’s TMD was updated to reduce the target allocation from 35 per cent to 10 per cent and introduced investment timeframes to the product.
RELI Capital’s stop order was lifted on 29 September after ASIC accepted amendments to the TMD which addressed the regulator’s concerns.
RELI reduced the intended product use to up to 25 per cent of a portfolio rather than being a core component (up to 75 per cent), and included additional considerations about the risk level of the fund, removed references to the fund being suitable for investors seeking capital preservation, and introduced distribution conditions.
ASIC has ramped up scrutiny on private credit after launching a discussion paper in February about regulator public and private markets.
While the regulator wanted industry feedback on whether public markets were too regulated and private markets were underregulated, a key subtheme was the distribution of private credit products to retail investors.
ASIC Commissioner Simone Constant told the Fiduciary Investors Symposium, hosted by Professional Planner sister publication Investment Magazine, that private credit is good for the economy “if done well”.
“In the responses [to the discussion paper], we had institutions, investors, originators and private credit fund managers… calling out for improvements in practices [and] a better picture of what done well looks like in private credit for institutions as well,” Constant said.
