The Australian Securities and Investments Commission’s (ASIC) 2026 Enforcement Priority, “Poor Private Credit Practices,” marks a definitive acceleration in regulatory enforcement — a “Regulatory Velocity Multiplier (24210)” event.

This action is the direct result of ASIC’s surveillance work (concluded in Reports 814 and 820), which identified systemic risks within the $200 billion private credit sector.¹ The evidence for this is best understood as a “golden thread” running through four connected findings:

1. Direct Causal Link: ASIC Deputy Chair Sarah Court, on the day the priorities were announced (13 November 2025), explicitly linked the new “Poor private credit practices” priority³ to the collapses of the “Shield and First Guardian schemes”³, defining them as “examples of private credit fund models”.³
2. Property Contagion Link Confirmed: In the same speech, Court identified the Shield/First Guardian failures as a convergence of “high-risk property investment” and “misconduct exploiting superannuation savings”.³ This provides a direct, primary-source link between the new private credit priority and its root in property-market contagion.
3. The Wealth Funnel (Retail/Super) Confirmed: The action is proven to be a defensive measure for the “Wealth Funnel.” ASIC’s foundational reports (REP 814, REP 820, REP 823) and subsequent analysis⁴ explicitly identify the at-risk investor base as “small, SMSF or wholesale investors”⁴, “retail investors”⁶, and “less sophisticated investors”⁵ being channelled into these high-risk property-backed funds. This is further triangulated by the simultaneous priority of “Holding super trustees to account”⁷, which targets the gatekeepers of the Wealth Funnel.
4. Capital Headwind for Developers Confirmed: The consequential impact on the “APN Future Development Pipeline Index™ (24400)” is confirmed by expert legal analysis. Firms like Allens⁶ and Bird & Bird⁸ confirm the new regulatory roadmap and “heightened focus” will “impact the establishment, operation and competitiveness of wholesale private funds in Australia”.⁶ By attacking the opaque fee and valuation models⁴ that make high-risk developer lending profitable for managers, ASIC is engineering an unavoidable increase in the cost and a decrease in the availability of this capital.

Together, the evidence demonstrates a cohesive, multi-pronged regulatory action, not a routine priority update.

The primary source documentation for ASIC’s 2026 Enforcement Priorities is set out below.

• Official Title: ASIC announces 2026 enforcement priorities.⁷
• Publication Date: 13 November 2025.⁷
• Source Identifier: ASIC Media Release 25-273MR.⁷
• Primary Spokesperson (Enforcement): ASIC Deputy Chair Sarah Court.³
• Primary Spokesperson (Strategic Context): ASIC Chair Joe Longo. His National Press Club address on 5 November 2025, set the strategic predicate for the enforcement action, warning of “under-examined risks in private credit” and the need for “hardening of guardrails around fast-growing segments such as private credit”.¹⁴

The elevation of “Poor private credit practices”⁷ is the trigger for this analysis. This priority was announced alongside others, including “Misleading pricing practices impacting cost of living” and “Financial reporting misconduct”.⁷

The timing and nature of this announcement illustrate the “Regulatory Velocity Multiplier (24210)” pattern: this was not a passive statement of intent, but an active demonstration of accelerated enforcement. On the exact same day (13 November 2025) that ASIC issued 25-273MR announcing the new priority, it also launched a coordinated enforcement blitz, including:

• Media Release 25-275MR: Announcing ASIC is suing SQM Research for misleading “Favourable” ratings issued for the Shield Master Fund.¹⁰
• Media Release 25-276MR: Announcing ASIC is taking action against MWL Financial Services for “inappropriate financial advice to clients to invest their superannuation into the Shield Master Fund”.¹⁰

This coordinated action, simultaneously announcing the new priority, identifying the exemplar of the harm (Shield), and filing litigation against multiple actors in that exemplar’s value chain (research houses, financial advisers), represents a significant acceleration of regulatory velocity. ASIC did not just signal its focus; it fired warning shots at the entire sector, using the Shield fund as the case study for the harm to superannuation savers examined later in this analysis, caused by the poor practices detailed next, in the property sector discussed further below.

The verbatim text of the new priority is “Poor private credit practices”.⁷

The media release⁷ itself provides limited definition. The specific conduct being targeted is detailed in the foundational surveillance reports (ASIC REP 814 and REP 820) and the accompanying speeches (e.g., Sarah Court’s 13 Nov speech) that ASIC has confirmed are the basis for this new enforcement priority.

The “poor practices” ASIC is targeting are not singular; they represent a systemic breakdown in governance, transparency, and valuation, which is being exploited to harm consumers.

Governance and Conflicts of Interest

The primary target is a breakdown in governance. Deputy Chair Sarah Court explicitly stated the priority “should send a message to the rapidly expanding private credit sector to get its governance right”.³

This follows ASIC’s surveillance (REP 820), which identified “Weak governance and poorly managed conflicts of interest” as a key area of harm.² The specific conduct targeted includes:

• Related-Party Transactions: The practice of “private credit real estate funds which lend to related party developers”⁹, which creates an unmanageable conflict regarding valuation, loan terms, and interest rates.⁹
• Incentive Misalignment (Opaque Fees): Fee structures where managers are “incentivised to continue to originate loans” to earn origination fees, which are not passed on to the fund, creating a risk of the fund being filled with “low-quality loans”.⁹
• Conflicted Capital Structures: The practice of fund managers “holding debt and equity in the same entity via the fund”¹⁸ or holding “both equity and debt in a company”¹⁹, which conflicts decision-making, particularly in “stress conditions”.¹⁹

Transparency, Disclosure, and Opaque Fees

The second major target is the systemic lack of transparency, which masks the true risk of the asset class. Deputy Chair Court cited “significant room for improvement” in “governance, transparency, and risk management”.¹³

This targets several “poorer practices” identified in ASIC’s surveillance²:

• Opaque Fee Structures: Analysis of REP 814 finds that “total remuneration is often several times higher than the stated management fee”.⁴ This is achieved via “borrower-paid fees”⁵ and “net interest margin capture”⁹ using Special Purpose Vehicles (SPVs)¹⁸, which are not transparently disclosed to investors.
• Misleading Valuation Practices: The use of “inconsistent and non-independent valuation methodologies”⁵, including “valuations… performed ‘in-house'”⁹, which are “likely to result in a conflict of interest”.⁹
• Non-Disclosure of Distribution Sources: A critical finding from REP 820 was that “all fund reports omitted information on the source of distributions paid to investors (cash or otherwise)”.² This hides the fact that distributions from non-cashflow-producing construction loans are being paid from new investor capital.⁵

Misleading Marketing and Terminology

This lack of transparency extends to external communications. Analysis of ASIC’s reports flags “inappropriate marketing of products”⁶ and “misleading representations”.¹⁰

The specific conduct includes:

• Inconsistent Terminology: The “loose or inconsistent use of terms”⁴ such as “‘default,’ ‘investment grade,’ and ‘secured loans'”², which “disguises risk”⁴ and makes comparison impossible for advisers and investors.
• Valuation Distortion (LVRs): A practice specific to the property development sector, where funds are “quoting loan-to-valuation ratios (LVRs) on completion value rather than cost”⁵ or using “‘as if complete’ valuations”.² This practice “can understate risk throughout the construction period”⁵, misleading investors about the security of their capital.

Consumer Harm and Cost-of-Living Exploitation

ASIC’s 2026 priorities also target cost-of-living exploitation. ASIC’s announcements repeatedly link the 2026 priorities to “protect consumers from financial harm”⁷ and address “the challenges Australians face while contending with higher living costs”.⁷

This cost-of-living theme is not separate from the private credit priority — it is the mechanism of exploitation. In a high-inflation, high-interest-rate environment, retail investors and retirees are seeking “steady income”.⁴ ASIC’s reports note that marketing material for high-risk property funds focuses on “regular, monthly distributions”.⁵ The “poor practice” is the exploitation of this cost-of-living-driven demand for yield. Fund managers are misleadingly marketing unsuitable, high-risk, illiquid property funds as a safe solution to cost-of-living pressures, which constitutes the precise “consumer harm” ASIC is built to prevent.

The “Poor private credit practices” priority is explicitly and causally linked to risks originating from “property development finance,” “real estate lending,” and “distressed assets” — confirming a direct property-contagion thesis.

The ‘Smoking Gun’: Court’s Direct Linkage

The primary validation is a direct, public statement from the regulator. In her enforcement priorities speech on 13 November 2025, ASIC Deputy Chair Sarah Court provided the “golden thread” linking the new priority to property-related contagion:

1. The Priority Link: She first stated, “we are elevating our enforcement work on poor private credit practices… Indeed, the Shield and First Guardian schemes are examples of private credit fund models”.³
2. The Property Link: She then explicitly defined the Shield/First Guardian failures, stating they represented a convergence of two 2025 priorities: “misconduct exploiting superannuation savings” and “high-risk property investment”.³

This “A=B, B=C” logic (Priority = Shield, Shield = Property) constitutes a direct, primary-source admission that the new private credit priority is a direct enforcement response to contagion risks originating from “high-risk property investment.”

Foundational Evidence (REP 814/820): Concentration in Property Risk

The surveillance reports that Court cited as the basis for the new priority³ are overwhelmingly focused on property-related risk. The regulator’s concern is that the entire Australian private credit market is uniquely exposed to a property downturn.

• Market Concentration: The Australian market is an outlier. Its “proportion of private credit invested in real estate and the concentration in higher risk construction and development lending” is a key feature differentiating it from overseas markets.⁵ This segment is “estimated at around $200 billion, approximately half of which is real estate–focused finance”.¹
• Source of Loss: This concentration is where ASIC identifies the primary systemic risk, noting “the concentration in real estate construction and development finance… has represented the majority of credit losses in past economic downturns”.⁵
• Distressed Assets/Insolvency Risk: ASIC’s surveillance (REP 820) expressed explicit concern that current “reporting may not provide investors with a true reflection of non-performing and distressed fund assets”.² This is a direct consequence of the poor practices detailed above, where “in-house”⁹ and “optimistic”⁴ valuations of “underlying real estate assets”⁹ are used to hide impairments and “understate risk”.⁵

This is not a theoretical risk. The regulator is intervening because it has identified a systemic vulnerability: a market with a high concentration of illiquid, high-risk construction loans⁵ is held by funds with “weak governance”² and “in-house valuations”⁹, and funded by “unsophisticated,” “SMSF,” and “retail” investors.⁴ This is the classic structural setup for financial contagion. A downturn in property values⁴ would expose the “distressed assets,” triggering a mass liquidity run from retail investors who were misled about the risks.

ASIC’s “24210” (Velocity) event is therefore a pre-emptive intervention to prevent this contagion. By forcing the “Poor private credit practices” (especially valuations and disclosure) into the open now, ASIC is attempting to force a controlled de-risking of the sector before it can trigger a catastrophic, investor-led collapse.

Mapping ‘Poor Practices’ to ‘Property Contagion’ Risks

The following table maps the poor practices detailed above to the specific property-contagion risks they create, as identified in ASIC’s surveillance and subsequent analysis.

The evidence provides a direct and repeated link between the private credit priority and the protection of “retail investors,” “SMSFs,” and “superannuation” savings — confirming the “Wealth Funnel” thesis.

Direct Linkage (Superannuation & Shield/First Guardian)

The same evidence examined above (Sarah Court’s speech³) does double duty here, as it explicitly identified the Shield/First Guardian (private credit/property) failures as “misconduct exploiting superannuation savings”.³ This provides the direct, causal link between the new private credit priority and the protection of superannuation assets.

This is not a standalone action. ASIC is conducting a “pincer movement” on the “Wealth Funnel.” The same media release (25-273MR) that introduced “Poor private credit practices” also lists “Holding super trustees to account for member services failures” as a continuing priority.⁷

Deputy Chair Court explicitly bridged these two priorities in her commentary, creating a single, unified regulatory front: “Reliable financial information remains more important than ever, particularly as entities with unlisted assets, such as super funds and private credit funds, play a bigger role in the economy”.¹³

Investor Base Identification (Retail, SMSFs, Unsophisticated)

ASIC’s surveillance reports and subsequent expert analysis are unanimous in identifying the specific investor base at risk from the property-backed private credit funds. This is the “Wealth Funnel” at its most vulnerable.

• ASIC (REP 814): Identifies the “exposure of retail and less sophisticated investors to this part of the market”.⁵
• ASIC (REP 814): Warns this specific segment “may present as a systemic risk for small and selfmanaged superannuation funds (SMSFs) and ‘sophisticated’ investors in a downturn”.⁵
• Analysis (BetaShares): Identifies “potential systemic risks… for small, SMSF or wholesale investors who tend to be the main investors in these funds”.⁴
• Analysis (Allens): Notes “private credit’s increased targeting of retail and less sophisticated wholesale investors (particularly in relation to private credit funds invested in real estate)”.⁶
• ASIC (General): Notes “Expansion to all investors creates risks… either indirectly through super funds or directly through new products made available to less sophisticated investors”.²³

Targeting the “Wealth Funnel” Distribution Channels

ASIC’s actions confirm it is not just attacking the product; it is attacking the distribution system that funnels retail savings into these products.

• ASIC (REP 820): ASIC has explicitly flagged it will “continue its surveillance… including looking at the distribution of private credit funds to retail clients through direct and advised channels”.²⁴ This confirms ASIC is targeting the “funnel” itself.
• ASIC (REP 823): ASIC notes that “For many retail investors, superannuation is the safest gateway to private markets,” but warns that “recent failures… offered through some superannuation fund menus… have exposed weaknesses in trustee protections”.²⁵

This is a comprehensive, two-front attack on the “Wealth Funnel.” ASIC is simultaneously attacking:

1. The Product: The fund managers via the “Poor private credit practices” priority.⁷
2. The Gatekeepers: The “super trustees”⁷ and “financial advisers”²⁴ who approve these products for “superannuation fund menus”²⁵ and “advised channels”.²⁴

This pincer movement is designed to reinforce the walls of the funnel (the trustees) while simultaneously neutralising the toxic asset (the poorly-run funds) being poured into it. This confirms the “Wealth Funnel” thesis as the central, protected entity.

Expert analysis from financial services lawyers and capital advisors, issued in direct response to the November 2025 ASIC announcements (REP 823, 2026 Priorities), confirms the new regulatory focus will create a “capital headwind” for developers. This headwind will manifest as a higher “cost of capital” and reduced “capital availability,” thereby impacting the “APN Future Development Pipeline Index™ (24400).”

Legal & Advisory Analysis (Allens)

• Source: Allens legal briefing, “ASIC’s evolving capital markets report: What it means for industry,” November 2025.⁶
• Assessment: The briefing analyses ASIC’s new “regulatory roadmap”⁶, which includes “proposals to impose significant additional regulation on the wholesale funds management industry”.⁶
• Impact Quote: “The recommendations could set the scene for a reform agenda to play out over the next decade, which could impact the establishment, operation and competitiveness of wholesale private funds in Australia”.⁶
• Significance: This confirms the capital-headwind thesis. Increased regulation and reform directly impact “competitiveness” and “operation.” This translates to higher compliance costs and operational friction for the very funds that provide capital to the Future Development Pipeline.

Legal & Advisory Analysis (Bird & Bird)

• Source: Bird & Bird legal briefing, “ASIC’s 2026 enforcement priorities – what’s on the corporate regulator’s mind,” November 2025.⁸
• Assessment: The firm’s “Takeaway” for the sector is a direct warning to prepare for the new enforcement regime.
• Impact Quote: “Private credit providers should ensure their practices comply… and consider updating procedures on responding to regulatory investigations, given ASIC’s heightened focus on this sector”.⁸
• Significance: This “heightened focus” and the mandatory “updating procedures” (e.g., commissioning independent valuations, enhancing compliance staff, increasing legal provisions) is the mechanism of the “capital headwind.” It represents a new, non-trivial cost of doing business that must be passed on to the end borrower: the property developer.

Legal & Advisory Analysis (Ironbridge Legal)

• Source: Accountants Daily, “ASIC warns private credit funds on disclosure, fees and governance gaps,” November 2025.²⁶
• Assessment: This analysis confirms the end of the previous “Wild West” era.²⁷
• Impact Quote: “ASIC has clearly signalled that private credit can no longer operate in a lightly regulated space… The risk now is not only regulatory action but civil litigation from investors and/or borrowers”.²⁶
• Significance: This quantifies the new cost. Fund managers must now price in both “regulatory action” risk and “civil litigation” risk. This fundamentally and permanently increases the “cost of capital” for this channel.

The “Capital Headwind” (24400) is not an unintended consequence of ASIC’s action; it is the intended, logical outcome of de-risking the “Wealth Funnel.” The private credit channel was only viable for “higher risk construction and development lending”²⁰ because the “poor practices” (opaque fees, in-house valuations, related-party lending) made it highly profitable for managers.⁴

ASIC’s new priority is a direct attack on this business model. To survive, managers must adopt “good practices”⁴: “independent valuations,” “transparent fees,” and “strong governance.” These practices are expensive, introduce compliance friction, and will force the proper valuation of “distressed assets”.² The only way for managers to remain profitable under this new, high-cost regime is to significantly increase the interest rates charged to developers. This price increase will make many high-risk projects unviable, thereby “tightening capital” and creating the “24400” headwind.

Taken together, the evidence establishes a clear, interconnected picture across every strand of this analysis.

The 13 November 2025 announcement of “Poor Private Credit Practices” as a 2026 enforcement priority is a definitive “Regulatory Velocity Multiplier (24210)” event. Primary sources (ASIC 25-273MR and speeches by Deputy Chair Court) provide a direct, explicit link between this priority and the failures of “high-risk property investment” funds³ — the property-contagion link at the centre of this analysis.

This action is demonstrably designed to protect the “Wealth Funnel” by targeting the exposure of “superannuation,” “SMSF,” and “retail” investors³ to these property-backed funds.

Finally, expert legal analysis⁶ confirms this new “heightened focus”⁸ will “impact the… competitiveness”⁶ of the wholesale funds. This action fundamentally deconstructs the “lightly regulated”²⁶ model that developers relied on, creating the posited “capital headwind” and tightening capital for the “APN Future Development Pipeline Index™ (24400).”

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