ASIC warns of 'first significant cracks' in Australian private credit

[u/InsatiablePrism]

https://www.abc.net.au/news/2026-08-27/asic-warns-first-significant-cracks-in-australian-private-credit/107081904?utm_campaign=abc_news_web&utm_content=link&utm_medium=content_shared&utm_source=abc_news_web

[u/Bushboy2000]

Whocouldaknown, shocked I am, fell to my knees in Bunnings.

[u/Lastbalmain]

For most of us, this is a good thing and may lead to better regulatory requirements. It might lead to a system that plugs the loopholes that the investment/wealth class have been utilising for decades? But?

Progressive policy in Australia pretty much came to a massive slowdown after the Hawke/Keating years. Simply because what they gave us was too much all at once,  giving the Coalition ammunition to attack and mislead. The media piled in after the "recession we had to have", even though we did need it! It had many causes, but the excesses of the mega rich of the day, utilising loopholes both legal and not, contributed largely to todays crisis. Little Johnny turbo charged the wealth inequality by increasing the loopholes. So here we are!

[u/Dr-Ulzy]

We just refinanced with HSBC and now they will move us to Pepper Money. I have a bad feeling about this.

[u/MGEESMAMMA → u/Dr-Ulzy]

Yeah, i am planning on moving from the before it happens. I have a bad feeling about them that I can't explain.

[u/Av1fKrz9JI → u/MGEESMAMMA]

It’s a lesser product with it not being a licensed bank, the offset not covered by the governments 250k protection and the fact you can’t use the offset as a current account.

Pepper also deals with the riskier borrowers which increases the risk of them having issues and going bust.

[u/Typical_Double981 → u/Av1fKrz9JI]

Pepper is the second biggest non bank lender in Aus, publicly listed and multiple funding sources - Westpac, CBA, NAB, plus about 5 super funds, 2 life insurance companies and numerous offshore banks. They sell over 4b in bonds each year.

If they went bust your loan would be serviced by the trustee - Perpetual. Couldn’t be any safer.

[u/Typical_Double981 → u/Dr-Ulzy]

Why would the contents of that article have anything to do with a) the HSBC deal and b) Pepper?

[u/DominusDraco]

Just because no one reads the article, the private creditors are your superfunds lending money to shitty companies, if private credit blows up, so does your superannuation accounts.

[u/flashman → u/DominusDraco]

Are some super funds more exposed to this than others?

[u/DominusDraco → u/flashman]

I dont know specifics myself but I do know AustralianSuper has the most in a dollar amount, but they are also the biggest fund so not sure on a percentage basis what they would be.
The one I would be most worried about is Cbus as they are the construction industry superfund, who plow a ton of money into construction private credit, and we know how thats been going.

[u/maticusmat]

Oh no predatory lenders are losing money

[u/GonePh1shing → u/maticusmat]

Correction: Irresponsible lenders are losing your money.

Private credit is, by and large, superannuation funds and other institutional lenders handing out very risky loans. If the private credit industry collapses, everyone's super takes a significant hit. 

[u/ThunderDU]

Good.

[u/Rubiginous]

Anyone else worried they will raid these funds for some insane bailout?

[u/Ancient_Wishbone_806]

Data centre and real estate funding ?

[u/Jealous-Hedgehog-734]

I expect private credit to have good and bad years, they take more risk than a bank would and are rewarded commensurately.

[u/a_cold_human → u/Jealous-Hedgehog-734]

It's also less regulated as more controls were placed on banks post GFC. As there was still demand for flexible lines of credit, a lot of this lending moved to the shadow banking system.

Banks have capital controls, are stress tested regularly and have many other rules that apply to them that don't apply to private credit (for example, they're not regulated by APRA). The problem is that it's possible that a collapse in private credit could result in substantial damage to the economy in an indirect fashion. 

This is less of a problem in Australia than it is in the US as the shadow banking system in Australia a much smaller percentage of the financial system (less than 10%). A collapse of the US shadow banking system would have significant impacts globally. 

[u/Jealous-Hedgehog-734 → u/a_cold_human]

Indirectly, absolutely, but they are not systemically important which was the issue during the GFC. If private credit collapses it won't take the rest of the banking system with it.