ASIC Halted New Offers in Three Mortgage Funds Holding $251.8m. The Order Is About the PDS, Not the Loans Your Clients Are In

What ASIC actually ordered

The order stops Australian Secure Capital Fund Limited (ASCF) from offering, issuing, selling or transferring interests in three funds: the ASCF Premium Capital Fund, the ASCF Select Income Fund and the ASCF High Yield Fund. ASIC says it made the interim order “to protect retail investors from acquiring products under a PDS that may be defective and not worded and presented in a clear, concise, and effective manner.”

ASIC identified three concerns with the product disclosure statement. It fails to disclose information about the funds’ loan portfolio and diversification metrics, and what is disclosed about those is not presented in a clear, concise and effective manner. It may contain a misleading and deceptive statement, and omits information about the cost of disposing of an interest in the funds. And it fails to adequately disclose details of an investor reserve account established to cover impairments and capital losses.

ASIC Commissioner Simone Constant said strong standards were essential in the private credit sector.

Two details matter for how you talk about this. The order is interim, and ASCF will have an opportunity to make submissions before any decision is made about final stop orders; ASIC says it will consider final orders if the concerns are not addressed in a timely manner. And the order arose from ASIC’s broader surveillance of private credit funds, which is focused on distribution to retail clients through direct and advised channels, as well as fees, margin structures and conflict-of-interest management in wholesale private credit funds. This was a sector sweep that landed on one issuer, not a one-off.

Why this lands on a broker’s desk

At 30 June 2026 the three funds held $251.8 million in assets under management, and ASIC notes each invests in short-term mortgages secured over Australian real property — vacant land, residential, commercial, retail or industrial.

ASCF’s own description closes the loop. On its website it says it was established in 2016, describes itself as a Brisbane-based fund manager operating those three pooled mortgage funds, and says the funds lend investors’ money to borrowers seeking short-term loans, with each loan secured by a registered mortgage over the borrower’s property. It states that its PDS prohibits construction and development lending, and loans to its directors, shareholders or associated entities.

On the lending side, ASCF advertises first mortgages up to 80% LVR over one to 24 months, second mortgages on the same terms, bridging loans, short-term business loans and purchase or refinance loans on full and low-doc terms. Its broker product guide tells brokers it makes its own credit decisions — “no middlemen here” — and says it works all over Australia “to ensure we can serve as many brokers as possible.” One of its own case studies is a broker-introduced bridging loan of $2,507,069 at 9.25% per annum over four months at an LVR of 78.36%.

So the vehicle that raises retail money under the stopped PDS is, on the issuer’s own account, the vehicle that lends to borrowers — including borrowers introduced by brokers. The interim order pauses new offers and issues of units under that document. Whether that changes ASCF’s capacity to fund new loans is not something ASIC’s release addresses, and it is not something a broker should assume either way. It is, however, now a fair question to ask out loud rather than take on faith, particularly if you have a short-dated settlement in the pipeline.

The diligence gap: product versus funding

Think about what your file actually records when you place a client with a private lender. Almost certainly: the rate, the LVR, the term, the fees, the exit, the turnaround, and why the mainstream options did not fit. That is product diligence, and most brokers do it well.

Now ask what the same file records about where the lender’s money comes from. For most brokers, nothing at all — and for a bank or an ADI-funded non-bank that is defensible, because the funding sits inside a prudential framework you are not expected to audit. For a retail-funded mortgage trust it is a different proposition. The funding is an offer document regulated under the Corporations Act, and when something goes wrong with it, the symptom is not a repricing email. It is a regulator stopping the offer.

That distinction is the useful lens here, and it cuts across the whole private lending panel rather than one issuer:

• Bank and ADI-funded lenders. Funding risk is supervised prudentially. You are not the right person to assess it, and nobody expects you to.
• Warehouse-funded non-banks. Funding sits with wholesale counterparties. Changes usually reach you as policy or pricing shifts, with notice.
• Retail-funded mortgage trusts. Funding depends on a live offer document and continued retail inflows. Changes can reach you as a regulatory order, published the same day, with no notice at all.

None of that makes the third category unsuitable. Retail-funded trusts do work the banks will not touch — the four-month bridge, the second mortgage behind an existing facility, the settlement that has to happen this week — and brokers place those files precisely because the alternative is no deal. The point is narrower: if you are going to use that category, you should be able to say something about the funding model when a client asks, and your file should show you thought about it.

Where best interests duty sits, and where it does not

This is the part most likely to be assumed rather than checked. ASIC’s guidance on the best interests duty, RG 273, states at paragraph 273.5 that “the best interests obligations apply only in relation to credit products that are regulated under the National Credit Act — that is, products provided to consumers for personal, domestic or household purposes or for the purchase or improvement of residential investment property.”

That matters because the short-term lending space mixes the two. ASCF’s broker guide itself draws the line, telling brokers it provides “coded loans to individuals; not just business borrowers.” On a coded file, your lender choice has to be defensible as being in that consumer’s best interests, and RG 273 is explicit at paragraph 273.23 that the best interests duty and the responsible lending obligations are distinct obligations that both apply whenever regulated credit assistance is provided by a mortgage broker. On a genuine business-purpose file, the credit is generally outside the National Credit Act, and the duty does not attach to it in the same way.

The practical risk is running one process for both and documenting neither properly. A broker who has a written reason for the lender choice on every short-term file — coded or not — is in a much better position than one whose file explains the product and is silent on the counterparty, regardless of which obligations technically bite.

The La Trobe precedent, and what it suggests

There is a recent comparison, and it is a reassuring one if you read it carefully. In September 2025 ASIC made interim stop orders against two products offered under the La Trobe Australian Credit Fund, the 12 Month Term Account and the 2 Year Account. ASIC said the target markets for both “suggest an inappropriate level of portfolio allocation given the risks of the Fund” and “do not include appropriate distribution conditions.”

ASIC revoked both interim orders on 24 September 2025 — six days after making them — once La Trobe amended the target market determinations, reducing the share of an investor’s investable assets treated as suitable from 50% to 25% and adding distribution conditions including a questionnaire to identify eligible investors.

Two cautions on using that as a template. Those were design and distribution orders made against target market determinations; the ASCF order is made against a product disclosure statement, which is a different instrument with different grounds. And one issuer resolving quickly tells you nothing about how another will. What the precedent does establish is that an interim stop order is often the start of a documentation negotiation rather than a verdict — which is exactly why a broker should not narrate it to a client as if a lender were in trouble.

What to review this week

There is also a client-communication job. If a borrower or a referral partner raises this story, the accurate version is short: ASIC has made an interim order about an offer document used to raise money from investors, it is not a finding of wrongdoing, and it does not say anything about existing loans. Brokers who go further than that are inventing content the regulator did not publish.

What to watch next

• Whether the interim order is revoked or made final. ASIC has said it will consider final orders if the concerns are not addressed in a timely manner, and that ASCF can make submissions first.
• Whether the surveillance produces more orders. ASIC has framed this as arising from a sector-wide review of private credit funds, and said it will act swiftly where it identifies disclosure concerns.
• Whether disclosure standards shift across the sector. Loan portfolio and diversification metrics, exit costs and reserve accounts are the three things ASIC named here. Issuers reading the release will be checking their own documents against that list.

Sources. ASIC media release 26-234MR, “ASIC halts offers in mortgage schemes managed by Australian Secure Capital Fund”, 8 October 2026. ASIC media release 25-206MR, “ASIC issues DDO stop orders against La Trobe Australian Credit Fund”, 18 September 2025, including the editor’s note recording the revocation on 24 September 2025. ASIC Regulatory Guide 273, Mortgage brokers: Best interests duty, paragraphs 273.5, 273.7 and 273.23. Australian Secure Capital Fund website (about and loan products pages) and its Broker’s Guide Loan Product Suite (V1127). Figures and quotations are taken from those documents as published at the time of writing.