Private Credit 2025

AUSTRALIA Law and Practice Contributed by: Alastair Gourlay, Lewis Grimm, Joanne Dwyer and Kathryn Sutherland-Smith, Jones Day

stability of the financial system from non-bank lenders are constrained by the small size of the sector. APRA has similarly noted that that the private credit sector does not pose a risk to financial stability, due to the relatively small share of sys- tem-wide lending in the housing sector. How - ever, APRA has expressed concerns about the exposure of Australian superannuation funds to private credit investments. APRA announced in August 2024 that it would continue heightened supervision of unlisted asset valuations gen - erally, while ASIC announced in January 2025 that private credit is a priority for supervision. It noted that it will be undertaking a surveillance programme of private credit funds and will seek feedback to adapt its regulatory approach as necessary. 2. Regulatory Environment 2.1 Licensing and Regulatory Approval Private credit providers typically do not need a licence or regulatory approval to lend money or to take security over assets in Australia. There are, however, certain laws and regulations which providers need to be aware of, as follows. • Banking licence to carry on a banking busi - ness in Australia, a banking licence granted by APRA is required. A licence granted by ASIC is required to carry on a business of providing prescribed financial services in Australia, known as an Australian Financial Services Licence (“AFSL”), or to carry on a business of providing credit to consumers in Australia, known as an Australia Credit Licence (“ACL”), unless a relevant exemp - tion applies. However, none of these licences are required for non-bank lenders, whether

domestic or foreign, to provide credit to cor - porate borrowers. • Consumer credit providing credit to consum - ers, which requires an ACL, includes lending to an individual for personal, domestic or household purposes or for residential invest - ment properties (purchase, renovation, or improvement). An ACL is therefore generally required for residential property financing and consumer finance leasing. • Reporting private credit providers may be subject to reporting and compliance obliga - tions (see 2.4 Compliance and Reporting Requirements ), including obligations under: (a) anti-money laundering and counter-ter - rorism financing legislation; and (b) financial sector data collection legislation. • Other regulation private credit providers are also subject to general business regulation for activities in Australia. Such regulations can include Australia’s foreign investment regime (see 2.3 Restrictions on Foreign Invest- ments ), privacy laws, or consumer protection regimes. In respect of Australia’s consumer protection regimes: (a) obligations will often apply when lending to a small business, even if an ACL is not required; and (b) liability regimes for misleading and deceptive conduct and unconscionable conduct apply generally to the conduct of a business, including to conduct that does not otherwise require an ACL or AFSL. 2.2 Regulators of Private Credit Funds ASIC is the primary regulator for consumer credit and for consumer protection obligations that apply to small businesses. Private credit lend - ers are not regulated in relation to their credit activities specifically if they do not provide credit which is subject to consumer protection laws.

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