ASIC Private Credit Disclosure: A Comms Problem
ASIC asked private credit to define its own terms. That makes disclosure a communications problem.
Somewhere in the list of practices the corporate regulator wants Australia's private credit industry to fix sits an item that reads like a style guide note. ASIC wants clear, concise, and consistent use of terms including "investment grade", "security", "loan to value ratio", and "senior debt".
That is a regulator telling a A$200 billion sector that its own vocabulary cannot be relied on. For fund managers raising capital, it lands as something more useful than a compliance obligation. Investors who cannot compare two funds because each defines its terms differently will default to the manager whose disclosure they can follow.
Third Hemisphere is an Australian communications agency specialising in investment communications across Asia-Pacific, including private credit, growth equity, venture capital, and trade finance. The agency's investor relations work sits precisely at this join: translating what a fund's documents can support into language an investor, a journalist, and a regulator will all read the same way.
What did ASIC actually find in private credit?
Private credit is lending provided by non-bank funds and managers directly to borrowers, outside the public bond markets and outside the banking system. In Australia it has grown quickly, and until recently it grew with limited data.
ASIC commissioned a paper on the sector, published as Report 814 Private Credit in Australia. Its findings set the context for everything that has followed.
The sector is estimated at around A$200 billion, and roughly half of that is estimated to be invested in real estate related assets. ASIC calls that split a feature distinguishing Australia from international markets. The exposure is characterised by significant investment in higher-risk real estate construction and development, and, in the regulator's word, concerningly, it involves a concentration of less experienced investors.
ASIC also states the obvious constraint on its own analysis: definitive data on the Australian private credit sector is difficult to obtain. A market where the regulator struggles to establish the size and shape is a market where an investor has little chance of doing so unaided.
What does ASIC want disclosed?
The progress update on Australia's public and private markets sets out the practices ASIC considers good. Read as a communications brief rather than a compliance checklist, the list is unusually clear.
Regular reporting of fund composition and independent loan valuations.
Disclosure of whether credit ratings are internal or third party, where ratings are used.
Disclosure of the scale of mezzanine debt and equity holdings.
Disclosure of all manager fees and earnings, including any interest earned.
Disclosure of liquidity risk management, leverage, and the fund's relevant policy.
Transparency of related-party or inter-fund transactions, with independent review.
Consistency in the use of investment and real estate terminology.
Every item on that list is answerable in plain English on a single page. Most fund managers answer them across a product disclosure statement, a wholesale information memorandum, a quarterly investor letter, and a website page, each written at a different time by different people.
Why is inconsistent terminology a commercial problem?
ASIC's list of concerning practices includes fee structures that often fail to quantify and make readily observable the true cost of managing the fund. It includes valuation practices covering the frequency, methodology, beneficiary, and independence of valuation, and the recognition of impairments. It includes mixed investment reporting across the market, which the regulator says leads to a lack of visibility on investment exposure. And it includes definitions and key terms.
Consider what that means in a live capital raise. An institutional investor comparing three Australian private credit funds encounters three definitions of senior debt, three approaches to stating loan to value ratios, and three fee presentations that each technically disclose everything while making the total cost difficult to calculate.
The investor's response is rational. They discount what they cannot verify, ask for more diligence, extend the timeline, or move to the manager whose numbers can be checked in an afternoon. Poor disclosure raises the cost of capital before it ever raises a regulatory issue.
What has ASIC already done about it?
Enforcement is underway rather than pending. ASIC has issued stop orders on several target market determinations because of poor disclosure and distribution of retail private credit funds, and has commenced enforcement investigations where it judged conduct more serious.
The regulator has also been explicit that some of the poorer practices it observed are potentially inconsistent with financial services law, including the obligation to provide financial services efficiently, honestly, and fairly, and the prohibition on misleading or deceptive statements. That last point is where marketing material and investor communications sit.
Its surveillance has widened. ASIC published findings from a review of 28 private credit funds, spanning listed, unlisted, retail, and wholesale vehicles, covering the period from October 2024 to August 2025. It has said its 2026 focus will sharpen on fees, margin structures, and conflict of interest management in wholesale private credit funds, as well as the distribution of those funds to retail clients through direct and advised channels. A pilot data reporting programme with a small sample of funds is planned to test the feasibility of collecting more comprehensive sector data.
Five things to fix before the next raise
Each of these is a communications task with a compliance benefit, and none requires waiting for further guidance.
Write one definitions page and use it everywhere. Senior debt, security, investment grade, loan to value ratio, mezzanine, impairment, and any term the fund relies on. One definition each, published, and referenced identically in the information memorandum, the quarterly letter, the website, and the pitch material.
State the total cost of the fund in one number, then break it down. ASIC's criticism is that fee structures often fail to make the true cost readily observable. A single all-in figure, followed by the components including any interest the manager earns, removes the objection and shortens diligence.
Publish the valuation policy in full. Frequency, methodology, who commissions the valuation, who performs it, and how impairments are recognised. A reference to a policy held elsewhere does little. Investors read a withheld methodology as a reason to look harder.
Disclose related-party and inter-fund transactions before you are asked. Include the independent review arrangement. A manager who volunteers this reframes the whole conversation.
Reconcile every channel against the fund documents. The website, the investor deck, the LinkedIn posts, and the award submissions should describe risk, liquidity, and returns in the same terms the documents use. Statements outside the formal disclosure carry the same prohibition on misleading conduct.
Who inside a fund manager owns this?
The reason disclosure drifts is structural rather than careless. Legal and compliance draft the product disclosure statement. The investment team writes the quarterly letter. Distribution builds the pitch material. Marketing owns the website. Each works from accurate source information, at a different point in the cycle, with a different reader in mind.
Nobody reconciles the four. So the fund ends up describing its liquidity terms four slightly different ways, and an investor who reads all four assumes the least favourable reading is the true one.
The fix is a single owner with authority across every channel, working from one claims register: each statement the fund makes about risk, return, fees, liquidity, valuation, and related parties, the document that supports it, and the person who approved it. It takes an afternoon to build and it prevents the drift that ASIC is now looking for.
Two questions for the next investment committee
Could an investor calculate our total cost of management from published material in 10 minutes? ASIC's concern is that fee structures often fail to quantify and make readily observable the true cost of managing the fund. If the answer requires a spreadsheet and a phone call, the disclosure is incomplete regardless of technical compliance.
Do our marketing materials and our fund documents define terms identically? Consistency in investment and real estate terminology is on ASIC's list of good practices, and statements made outside a formal disclosure document remain subject to the prohibition on misleading or deceptive conduct. A single reconciliation pass across the website, decks, and investor letters closes most of the gap.
Where the opportunity sits
ASIC has said the private credit industry has shown willingness to engage and to implement more consistent standards, and has encouraged industry bodies to lift Australian standards proactively. It has also said, plainly, that private credit done well is good for investors and borrowers alike, complementing the banking system and supporting innovation, employment, and growth.
That leaves room for a manager to move first. In a sector the regulator describes as inconsistent in its reporting and its terminology, being the manager whose disclosure is easy to read is a competitive position rather than a compliance exercise. It shortens diligence, widens the pool of investors who can form a view, and gives journalists something accurate to quote.
Third Hemisphere works with fund managers, investors, and listed businesses on exactly this material, and handles the version that goes wrong in public through its crisis management practice. Jeremy Liddle (LinkedIn), the agency's Managing Director, has invested in over 25 technology and climate startups, which shapes how the agency reads what an investor is actually assessing.
The takeaway
Private credit's disclosure gap is largely a language gap, and language is fixable this quarter without waiting for new rules. Define the terms once, publish the total cost, show the valuation method, and the fund becomes easier to back than the one next to it.
To pressure-test how your fund reads to an institutional investor, book a consultation or browse Third Hemisphere's insights.