Australia's FSC Issues Mandatory Private Credit Standards
Responding to regulatory pressure, Australia's Financial Services Council has released a new mandatory standard for private credit managers, effective July 2027.
Australia's Financial Services Council (FSC) has issued a mandatory new standard for the private credit sector, responding to regulatory pressure and recent high-profile collapses. Standard 30, which takes effect on July 1, 2027, is compulsory for all FSC full members managing private market funds and establishes a formal definition of "private credit" for the first time. The new framework sets obligations across seven pillars: governance, credit risk management, fees and transparency, valuation governance, liquidity risk, fund leverage, and conflicts of interest.
Sophisticated counsel and their clients care because the standard is expected to become an industry-wide benchmark, influencing enforcement actions by the Australian Securities and Investments Commission (ASIC), as well as assessments by ratings agencies and institutional investors. All private credit managers, including non-FSC members, will need to assess their operations against this new framework to manage regulatory and litigation risk. Fund managers should now conduct a gap analysis of their current practices and prepare to update their credit risk frameworks, valuation governance, and investor disclosures before the 2027 deadline.