Australia’s swiftly growing private credit industry has been warned after the discovery by the corporate regulator that some lenders are concealing loan defaults.

The Australian Securities and Investments Commission (ASIC) has raised concerns about the murkiness surrounding the nation’s booming $200 billion private credit market.

The regulator cautions that retail investors face potential risks from loan defaults, which might also have broader economic repercussions.

ASIC’s worries are detailed in a report derived from an investigation of 28 retail and wholesale funds conducted between last October and August.

The findings uncovered potential inadequacies among private lenders, such as opaque reporting and conditions, a lack of transparency concerning fees and interest rate margins, insufficient credit risk management, and weak governance structures.

The regulator has put forward proposals it wants to see adopted by the private credit industry, including clearer reporting of loan defaults to give investors an accurate picture of how funds are performing.

ASIC highlighted big differences between lenders in the standard of default reporting.

”We are concerned that private credit fund reporting may not provide investors with a true reflection of non-performing and distressed fund assets,” it said.

ASIC chair Joe Longo said most developed countries were grappling with the same changes and that there were major opportunities for Australia.

“This roadmap lays out the choices and future of Australia’s markets. We want our markets – private and public – to grow,” he said.

“That growth means stronger businesses, more jobs and a boost to our economy.

“Strong markets have strong market integrity.

“We want to lay the foundations for managed investment schemes and private markets to sustainably thrive for the future benefit of business and investors.”