ASIC commissioner Simone Constant has fired a shot across the bow of Australian private credit, warning the clock is ticking on poor lending practices.
Meanwhile, a private credit investor has told the ABC a contagion or run of funds in the industry remains "possible" should more investors worry about retrieving their money from funds.
ASIC has signalled there is no time to waste in preventing an Australian private credit crisis.
Today, ASIC commissioner Simone Constant will tell a gathering in Sydney hosted by the Commercial and Asset Finance Brokers Association (CAFBA) that the "clock is ticking" on "whether we see broader credit stress or not" in Australia.
The collapse of NSW property developer Bathla has highlighted how private lenders are exposed to financially vulnerable construction companies.
CVS Lane First Mortgage Fund and CVS Lane Property Finance Fund had exposure to Bathla across nine different loans.
Private credit is any lending outside the banking sector.
One estimate has the sector domestically growing by 500 per cent over the decade, according to ASIC.
Over the past 18 months, ASIC has intensified its scrutiny of private credit, beginning with its discussion paper on public and private markets.
Global investment bank Morgan Stanley announced late last week it was curbing redemptions at its nearly $US7 billion private credit fund again in the third quarter.
The North Haven Private Income Fund capped withdrawals at 5 per cent after investors asked to pull 11.4 per cent of shares, according to a shareholder letter.
Speaking at a federal parliamentary hearing on Friday, Reserve Bank governor Michele Bullock also showed Australian private credit risks were being contained.