The purpose of the report is for ASIC to give insights on what good operating practices look like and to share some improvements for some operators to adopt. It also highlights emerging risks and areas where greater transparency and governance are needed to protect investor interests. 

Key takeaways from the article published by ASIC 

• Private credit plays a valuable role in the Australian economy, complementing bank and public market lending 

• The market has grown significantly post-GFC, now estimated at $200 billion, with ~50% in real estate-focused finance 

• Growth is driven by superannuation inflows, institutional investment, and demand for yield. 

Key issues identified 

Conflicts of interest 

The review uncovered several critical areas where conflicts of interest and transparency challenges frequently arise. These issues are common across fee structures, valuations, related party transactions, and loan structuring. In some cases, managers retain 50–100% of borrower-paid fees, creating a clear misalignment with investor interests. Additionally, the use of special purpose vehicles (SPVs) to capture excess interest margins further reduces transparency and makes it harder for investors to fully understand the fund’s true economics. 

Fees and remuneration 

Significant concerns were raised about fee transparency and how remuneration aligns with investor interests. Often, fee structures are opaque and inconsistently disclosed, making it challenging for investors to understand the true cost of their investment. In some cases, managers earn several times the disclosed management fee through hidden borrower-paid fees. To promote transparency and comparability, best practice calls for all fees, regardless of how they are charged, to be clearly disclosed as a percentage of fund assets. 

Portfolio transparency and valuations 

The report highlighted inconsistent valuation methods and transparency issues that may mislead investors about the true performance of private credit portfolios. Valuation practices differ widely across funds, with many lacking quarterly independent valuations. For real estate-backed loans, valuations often depend on gross rent or projected completion values, which can significantly inflate asset values. Furthermore, some funds report no impairments, a practice that seems inconsistent with expected default rates and raises questions about the accuracy of their portfolio reporting. 

Terminology 

Inconsistent use of key terms such as “investment grade,” “senior debt,” and “LVR” contributes to investor confusion and risks misrepresenting the true level of risk. This lack of clarity can lead to misunderstandings about the quality and safety of investments, making it harder for investors to make informed decisions. 

Investor protection concerns 

Several investor protection concerns were identified, particularly affecting retail and wholesale investors relying on sophisticated investor exemptions who face higher risks due to a lack of transparency. The report also highlights that real estate construction and development finance is a high-risk, concentrated sector, which may pose potential systemic risks. Additionally, distributions in some real estate funds may be paid from capital rather than income, raising further concerns about the sustainability and safety of returns. 

Recommended good practices  

ASIC recommends several good practices to enhance transparency and investor protection, including quarterly fund composition reporting that covers impairments, PIK loans, and distribution sources. Independent quarterly valuations should be conducted to ensure accuracy, while full and transparent fee disclosure, including all borrower-paid fees, is essential. Clear definitions of key investment terms are important to reduce confusion, alongside comprehensive disclosure of leverage, liquidity mechanics, and governance structures to provide investors with a complete understanding of the fund’s operations. 

Regulatory issues for ASIC’s consideration 

The lists below highlight key areas for ASIC’s attention, identifying market practices and operational issues where enhancements can benefit both the market and investors. Raising standards and improving disclosure in these areas are essential steps toward strengthening trust and confidence in Australia’s private credit sector. 

Priority issues 

• remuneration and fee disclosure 

• related party transactions and governance 

• valuation frequency and independence. 

Secondary issues 

• liquidity mismatch 

• investment reporting standards 

• terminology clarity 

• sector concentration risks. 

International comparisons 

• Australia lags behind the US and Europe in transparency and regulation 

• overseas markets are moving toward greater disclosure, especially for retail investors 

• examples include the UK LTAF, EU ELTIF, and Singapore MAS initiatives. 

Systemic risk 

• not currently a major concern, but real estate development and retail investor exposure are areas to monitor 

• ASIC could consider a reporting framework to track systemic risks and market integrity. 

At SW we regularly assist private credit providers to structure their operations in a way that is transparent, tax effective, and protects investors. Our financial services team can also offer insights into the most effective systems to use as well as provide accounting and assurance services. 

In our experience, private credit providers face several complex challenges during the start-up phase. These include setting up systems, establishing tax structures, ensuring compliance, and building the right relationships and support networks. Addressing these areas early is crucial for enabling business growth and maximising its potential. 

More mature private credit funds tend to encounter increasingly complex issues, often related to compliance, sustaining growth, and maintaining the quality of their loan portfolios. Navigating these challenges requires robust operational frameworks and ongoing oversight. 

Putting good operating structures in place, such as those recommended by ASIC, not only positions private credit providers for long-term success but also protects investors, creditors, and directors from compliance risks and financial setbacks. 

How SW can help 

Our financial services team has deep experience working with private credit providers across all stages of maturity. We offer tailored solutions to help start-ups establish strong foundations and support mature funds in managing growth, regulatory compliance, and portfolio quality. From designing transparent fee structures to implementing governance frameworks and performing independent valuations, we provide end-to-end support that promotes operational excellence and investor confidence. 

The post ASIC publishes new report on private credit in Australia appeared first on SW Accountants & Advisors.

Over eight months, SW worked closely with the Blackwattle team and Hamilton Locke lawyers to provide a seamless and efficient establishment of the investment firm, ensuring that all aspects of the Group’s goals were addressed and that Blackwattle had a solid foundation to build upon. 

SW involvement was key in assisting Blackwattle’s implementation of their long term incentive plan which underpinned Blackwattle’s key strategy of striving to be ‘”the most aligned fund manager in the country”. SW also facilitated the establishment of a corporate structure appropriate to the long term success of the funds management business.  

Facilitating the Blackwattle difference 

One of the key areas of focus was providing expert tax advice in relation to the start-up employee share scheme (ESS) provisions. A significant strategy of the fund is the requirement that portfolio managers invest in the funds they are managing, so the employee long term incentive plans were a crucial aspect.  

“We invest alongside our investors and clients, with personal capital committed and corporate profits reinvested into our portfolios, there is no personal trading,” said Blackwattle Managing Director and CIO Michael Skinner. “Having significant ‘skin in the game’ means we are 100 per cent aligned to the common interest of our clients, which is uncommon in the Australian funds management industry,” he added. 

SW advised on and reviewed employment agreements, employee share option plan rules, independent director agreements, and shareholder agreements to ensure compliance and optimal outcomes for Blackwattle and its investors. 

Leveraging his extensive experience and expertise in the funds management industry, SW Director Simon Tucker led the advisory for Blackwattle, working with the SW team to bring valuable insights and strategic advice to Blackwattle. 

“We are thrilled to have been a part of Blackwattle Investment Partners’ journey from the very beginning,” Tucker said. “Our collaboration enabled us to provide tailored solutions and guidance, supporting the firm’s growth and ensuring a solid foundation for success. We are grateful for the trust placed in us and look forward to continuing our partnership.” 

The partnership between the companies was initiated by Blackwattle’s legal team Hamilton Locke, who recommended SW based on their excellent reputation in the funds management industry. The successful completion of this engagement further strengthens SW’s position as a trusted advisor in the financial sector. 

Blackwattle launched with capital backing for more than five years, distribution of four investment portfolios from day one, a five person board as well as third party governance with independent chair-headed ESG and Investment Councils.  

Key professionals from SW Accountants & Advisors included Justin Batticciotto, Tom Warrington and Dennis Low. 

For more information about SW Accountants & Advisors and their range of services, please visit sw.com.au or contact Amanda Lee.

About SW Accountants & Advisors: 

SW Accountants & Advisors is a leading financial advisory firm providing a comprehensive range of accounting and advisory services to clients across various industries. With a team of seasoned professionals and a client-centric approach, SW delivers tailored solutions and strategic advice to help businesses achieve their goals. 

Reach out to Simon Tucker or learn more about our startup advisory services here.

Media contact

Amanda Lee
Head of Business Development & Marketing

E alee@sw-au.com
P +61 3 8635 1853

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This is devastating news for many, and has caused a variety of issues for those SIV holders who have been impacted by these investments which that need to be considered and actioned in a timely manner. In some instances, there is little time to reorganise these affairs, and many clients have shared with us that they have limited time to find a solution.
In response to these concerns, ShineWing Australia has put together a panel of experts to assist impacted individuals to help provide them with a ‘full-circle’ solution comprising legal, migration and financial help in one place.
Seeking out qualified, registered and independent migration and investment advice is particularly important at all times. This will ensure that any conflict of interest on the advisor side is removed, and that you are being informed of options that are right for your situation before making investment choices.

Migration

ShineWing Australia has highly experienced migration agents with particular expertise in assisting clients from the Asia-Pacific region to obtain an Australian visa. We advise on many different visa classes according to individual circumstances and personal needs, including SIVs.

As Registered Migration Agents (RMA) we act independently, and we also adhere to the Code of Conduct set out by the Office of the Migration Agents Registration Authority.

If you are a current SIV holder and have been affected by breaches of complying funds, and you think it may have jeopardised your visa status, we will be able to offer you a free consultation on your visa and investment status. Our services areas are listed below but we are happy to assist in other visa matters as appropriate.

Financial Services

ShineWing Australia’s Financial Planning and Debt Advisory services are provided by Authorised Representatives of ShineWing Australia Wealth Pty Ltd AFSL/ACL 236556.

When investing as an SIV or otherwise, it is important to perform sound due diligence on your intended investment target and ensure:

• there are no conflicts of interest

• the investment vehicle has a proven track record of underlying managed funds

• it has a strict compliance regime

• it has the correct diversification per section of the SIV framework

• the fund or investment vehicle is registered and compliant with ASIC

• that the fund is backed by independent advice and focused on asset quality, as opposed to a focus on the sale of a particular product.

Managing the wealth and private affairs of business owners, families and high net worth individuals requires a deep appreciation of individual circumstances, and a detailed understanding of immediate needs and future financial objectives.

Private Clients and Wealth covers the following services:

For an immediate response and for the services below, our panel members will be able to help you with the following:

If you require assistance with one or more of the above areas, and would like to discuss your options in a private, confidential and free of charge consultation with one of our panel experts, please get in touch in one of the following ways.

SIV enquiries

Click here to contact our experts today.

Email us via SIVsupport@shinewing.com.au.

Follow us on WeChat for the latest updates and webinars.

The post Migration Update – Expert Assistance for SIV holders and Investors appeared first on SW Accountants & Advisors.

A number of recent articles in the Australian press have discussed the liquidation or voluntary administration of several large funds that were specifically created as complying funds for the SIV program.

There are a variety of issues that people who have been impacted by these investments need to consider or action, and many have shared that they have limited time to find a solution.

ShineWing Australia has prepared a panel of experts to provide you with a full range of options, in one place, to assist you with decisions on how to move forward. Our team, and those of our partner firms, have already assisted several clients who have been affected in these matters, including:

Legal solution:
An investor approached us to discuss their legal options to recoup money that had not been returned. We advised a strategic solution through Australia’s legal system and assisted in a favourable judgement by the Supreme Court.

Visa solution:
A client had held their Subclass 188c Visa holder for 2 years before finding out recently that their Complying Fund had been breached. We immediately notified the Department of Home Affairs who granted us an extension to the 30 day investment switching rule and allowed our partner legal team to investigate the matter while the SIV holder and their family were able to continue their stay in Australia.

Our panel members will be able to help you with the following:

If you require assistance with one or more of the above areas, and would like to discuss your options in a private, confidential and free of charge consultation with one of our panel experts, please get in touch in one of the following ways.

SIV enquiries

Click here to contact our experts today.

Email us via SIVsupport@shinewing.com.au.

Follow us on WeChat for the latest updates and webinars.

The post Expert assistance for SIV holders appeared first on SW Accountants & Advisors.

With the increase in popularity of investment bonds, the ShineWing Australia Wealth team is pleased to invite you to attend our upcoming seminar with guest speaker: Grant Hackett OAM, the Chief Executive Officer of Generation Development Group, a major provider of investment bonds.

Over lunch, Grant will discuss key investment strategies and the application of each strategy focusing on:

• Bonds as a complementary strategy to superannuation
• Understanding trusts and reducing distributable income
• Gain insights on saving for future generations
• Learn how to stay in control of transferring wealth
• Case studies to showcase the application of each strategy

Event details

Guest speaker

Grant Hackett OAM, Chief Executive Officer, Generation Development Group Grant joined the Generation Development Group (GDG) Executive Team in September 2017 and was recently appointed as Chief Executive Officer, GDG. With over 12 years of experience, Grant has held many senior positions across marketing, distribution and wealth management for Westpac and BT Financial Group. Grant’s qualifications include an Executive Masters of Business Administration with first class honours, a Diploma of Business Law and a Diploma of Financial Services. Prior to his corporate career, Grant was a multiple Olympic champion representing Australia in swimming and has held numerous world records.

Registration and more information

For more information about these events, or if you have any queries, please contact the ShineWing Australia Marketing team via marketing@sw-au.com.

We look forward to your attendance.

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