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The Australian Securities and Investments Commission (ASIC) order stops private credit fund Australian Secure Capital Fund (ASCF) from offering, issuing, selling, or transferring interests in three of its funds: the ASCF Premium Capital Fund, ASCF Select Income Fund, and ASCF High Yield Fund.
As at 30 June 2026, the three funds had $251.8 million in assets under management. Each fund invests in short-term mortgages secured over Australian real property, including vacant land, residential, commercial, retail, and industrial properties.
ASIC said it made the interim order to protect retail investors from acquiring products under a product disclosure statement (PDS) that “may be defective and not worded and presented in a clear, concise, and effective manner”.
ASIC has the power to issue a stop order where a PDS does not disclose all fees and costs associated with an investment, does not include information reasonably expected to materially influence a reasonable retail client’s decision to acquire the product, or includes information that is not worded and presented in a clear, concise, and effective manner.
ASIC raises disclosure concerns
ASIC said it was concerned the PDS:
- Fails to disclose information about the funds’ loan portfolio and diversification metrics, with the information disclosed about these matters not presented in a clear, concise, and effective manner.
- May contain a misleading and deceptive statement and omit information about the cost of disposing of an interest in the funds.
- Fails to adequately disclose details of an investor reserve account established to cover impairments and capital losses.
ASIC threatened it will consider making final orders if the concerns are not addressed in a timely manner. ASCF has, however, an opportunity to make submissions before ASIC decides whether to make any final stop orders.
Private credit scrutiny
The interim stop order arose from ASIC’s surveillance of private credit funds, which is focused on the distribution of private credit funds to retail clients through direct and advised channels.
The surveillance also covers fees, margin structures, and conflict-of-interest management in wholesale private credit funds.
“Firms must ensure their disclosures to investors are transparent and support informed decision making, including to help investors understand the strategies and risks of their products,” ASIC commissioner Simone Constant said.
“As foreshadowed in all our work in the private credit space, where ASIC identifies disclosure concerns, we will act swiftly to protect investors from potential harm and promote higher standards across the sector.”
ASIC has also flagged concerns around “concentration and the risk of an unknown amount of debt or level of credit risk” in private credit, particularly in real estate, as well as unknown levels of exposure for retail investors.
The regulator said its early surveillance findings aligned with “better and poorer insights” identified across the sector, particularly around valuations, liquidity, and transparency. Some of the poorer practices were “potentially inconsistent with financial services law”, ASIC said, adding that it had already used its regulatory and enforcement tools where it identified misconduct.
ASIC said it will release further findings from its private credit surveillance in November, alongside “guidance principles for compliant private credit” and a forward-looking roadmap covering industry standards and future surveillance activity.
[Related: AUSTRAC begins AML/CTF crackdown as broker obligations remain unclear]
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