Simone Constant said ASIC is "beyond warnings" and told Australian private credit funds to prepare for enforcement action as stress fractures emerge in lending, governance and disclosure.
Bathla's collapse sharpened the warning: ASIC says the fast-growing sector's controls have not kept pace, with vulnerable construction exposure now testing weak underwriting and valuations at scale.
ASIC's review of 28 funds found only four disclosed borrower interest rates, less than half had written credit or default policies, and only two wholesale funds stress-tested liquidity risk.
Redemption pressure abroad has added to local anxiety after Morgan Stanley again capped withdrawals at 5% in its nearly $US7 billion North Haven fund when investors sought to redeem 11.4% of shares.
Australian risks are still seen as contained by the Reserve Bank, but ASIC wants industry bodies and funds to adopt stronger standards within three months before investor concerns deepen.
As ASIC's 2027 deadline looms, could the regulator's crackdown on private credit trigger the very liquidity freeze it aims to prevent?
With billions tied up in fragile construction loans, are yield-hungry retail investors about to face a devastating wave of frozen redemptions?
Australia’s $200 Billion Private Credit Shock: The Bathla Collapse, Superannuation Exposure, and the Urgent Overhaul of Shadow Banking Regulation
Overview
The Bathla Group’s collapse in August 2026 was triggered by a combination of new regulatory pressures—like the costly Decennial Liability Insurance and a mandatory 2% bond—which drained the company’s liquidity and led private lenders to refuse debt rollovers. This event exposed deep vulnerabilities in Australia’s booming private credit market, as traditional banks had already pulled back from risky real estate lending, leaving non-bank lenders and superannuation funds heavily exposed. The fallout forced major funds to restrict investor withdrawals, prompting ASIC to ramp up enforcement and the Financial Services Council to introduce new industry standards, aiming to restore stability and transparency across the sector.