ASIC Halted Offers in a $573.2m Mortgage Fund on 26 October. The Order Is About the PDS, Not the Loan Book — and the Last One Was Lifted in 11 Days

What ASIC actually did

An interim stop order is an order about a document. In both cases ASIC acted on the product disclosure statement — the document the fund uses to raise money from retail investors — and the effect is to stop the manager offering, issuing, selling or transferring interests in the scheme.

For the Murdoch Clarke Mortgage Fund, ASIC’s stated concerns with the PDS were that it fails to disclose information about related party transactions, fails to adequately disclose fees and costs, contains insufficient risk information that is not clear, concise and effective, and fails to adequately and prominently disclose withdrawal details.

For the three ASCF schemes — ASCF Premium Capital Fund, ASCF Select Income Fund and ASCF High Yield Fund — ASIC’s concerns were that the PDS did not adequately disclose the funds’ loan portfolio and diversification metrics and did not present what it did disclose clearly, concisely or effectively; that it may contain a misleading or deceptive statement and omitted information about the cost of exiting an interest; and that it did not adequately detail an investor reserve account established to cover impairments and capital losses.

That distinction matters commercially as much as it matters legally, because of what happened next to the first one.

The part that got less coverage: the first order was revoked

ASIC revoked the interim stop order on the ASCF schemes on 19 October 2026, after ASCF amended the product disclosure statement. The order was made on 8 October. It lasted 11 days. ASIC’s note on the release recommends that investors consider whether the products remain suitable for their objectives, financial situation and needs.

That is not an outlier. In the two comparable actions on mortgage and private credit funds in September 2025, both orders were also lifted once the disclosure documents were revised — the La Trobe US Private Credit Fund order after 13 days and the RELI Capital Mortgage Fund order after 10 days, according to analysis published by law firm Hall & Wilcox.

Why an investor document lands on a broker’s desk

Most brokers will never read a PDS. The connection is simpler than that. A stop order halts the fund’s ability to take in new retail money. For a fund whose loan book is funded substantially by retail investor inflows, inflows and lending capacity are related — which makes the obvious question for a broker with a live file a question about timing and about drawdowns, not about whether the client’s existing contract is valid.

It is worth being precise here, because overstating it is the easy mistake. A stop order is not a redemption freeze, and it is not an instruction to any fund to stop lending. Neither ASIC release says anything about either manager’s capacity to fund approved loans. In its 1 October 2026 analysis of the sector, law firm Clayton Utz observed that redemption freezes elsewhere in private credit could limit the capital funds have available to lend — an observation about the sector, not a finding about these funds.

So the right posture is not alarm. It is a phone call and a written answer. Consider the broker who settled a client’s land purchase on a nine-month facility with a non-ADI mortgage fund and has two progress draws left. If that manager’s PDS is stopped on a Monday, nothing in the client’s loan contract changes. But the broker now has one question worth putting to the BDM in writing — are funds confirmed available for the remaining draws, and on what notice — and a client who may well read about it before the broker calls. The work is the call and the confirmation. The failure mode is finding out at drawdown.

What ASIC said to commercial brokers in September

This is not a sector ASIC has been quiet about, and it has not confined its remarks to fund managers. Speaking at CAFBA’s commercial property and development finance summit in Sydney on 22 September 2026, ASIC Commissioner Simone Constant told the room that ASIC was examining 24 more private credit funds following an earlier review of 28, that it had multiple enforcement investigations under way, and that managers, boards and distributors had until the end of 2026 to meet its expectations. She described “stress fractures or cracks” in the sector, and said: “The clock is ticking, we will do what we say we’re going to do.” These remarks are reported by The Adviser, which attended the summit.

The part of that address aimed squarely at the broker channel was a warning against treating loan-to-value ratio as a sufficient standalone measure of credit risk. ASIC had seen LVRs assessed on an as-complete basis across a five-year construction period — a number that describes a building that does not exist yet, on a timeline long enough for the assumption underneath it to stop being true.

Brokers who write development and construction finance will recognise that immediately, because an as-complete LVR is often the number on the term sheet. The point is not that the metric is illegitimate. It is that a single ratio, calculated on a forecast valuation, is a thin basis on which to tell a client a deal is conservatively geared.

What the first surveillance report found

ASIC’s first private credit surveillance report, REP 820, was published in November 2025 and reviewed 28 funds — 20 registered retail funds and 8 unregistered wholesale funds. It estimated the Australian private credit market at around $200 billion in assets under management.

Three findings in that report are worth a broker’s attention:

• Only four of the 28 funds published information about the interest rates or ranges charged to borrowers.
• Fewer than half — seven retail and five wholesale funds — had detailed, written credit or impairment and default management policies in place.
• Of the wholesale funds, only two performed stress testing as part of their liquidity risk management.

The first of those has a direct bearing on broker files. If only four of 28 funds published what they charge borrowers, then a broker comparing a private funder’s pricing is largely working from what that funder chose to tell them on a term sheet. That is a workable basis for a commercial conversation. It is a weaker basis for a file note that says you compared the market.

Commissioner Constant said on 26 October that ASIC would release the findings of its second private credit surveillance soon, and that “it’s already clear that practices are not where we need them to be.” In the ASCF release earlier in the month she said: “Firms must ensure their disclosures to investors are transparent and support informed decision making.”

Where best interests duty actually bites

It is tempting to reach for best interests duty here, and worth being accurate about when it applies. ASIC’s guidance is explicit on scope: RG 273.5 states that the best interests obligations “apply only in relation to credit products that are regulated under the National Credit Act” — consumer-purpose loans and loans for residential investment property.

A development facility advanced to a company for a commercial purpose generally sits outside that. If that is the work you do, your reason for scrutinising a funder is commercial and reputational, not BID.

But a great deal of bridging and land lending is regulated credit, and there the funder is part of the recommendation, not just the plumbing behind it. Three paragraphs of RG 273 are worth re-reading with a private funder in mind:

• RG 273.73(d) lists “the credit policy and risk appetite of the credit provider” among the factors a broker may take into account.
• RG 273.71(b) recognises that value can come from matters that are more difficult to quantify, “such as the service levels and policies of the credit provider.”
• RG 273.77 accepts that some consumers will prioritise approval time and compromise on cost — and then puts the burden back on the broker, stating that any claims of this nature a broker makes “will be evidence-based and able to be substantiated.”

That last one is the sharp edge. If you placed a regulated client with a private mortgage fund at a materially higher rate because it would settle quickly, RG 273.77 means the speed claim is yours to substantiate. A funder whose retail offers were paused last month is not disqualified from that claim — but it is a claim that now needs something behind it beyond habit.

RG 273.113 also says brokers should be accredited with a reasonably representative panel of credit providers, which is a useful prompt for anyone whose short-term lending has quietly narrowed to one or two funds.

Five questions before you lodge with a non-ADI fund

None of this argues against using private credit and non-ADI mortgage funds. They fund deals the majors will not look at, on timelines the majors cannot meet. It argues for knowing how the funder behind the term sheet is itself funded. Five questions, asked once per funder and written down:

1. Where does this funder’s money come from? A retail PDS, wholesale mandates, a bank warehouse, or its own balance sheet? Only the first is directly exposed to a PDS stop order. This single answer tells you whether the news cycle is relevant to your files at all.
2. Is there a current or recent stop order over its offer documents? ASIC publishes these as numbered media releases and they are searchable by manager name. It is a two-minute check before lodgement, not a research project.
3. What does the approval actually commit to? Read the funding condition. Is settlement conditional on the fund having liquidity available at the time of drawdown, and who decides that?
4. For construction and staged facilities, who confirms funds for each draw, and on what notice? Progress draws are where a funding question becomes a client’s problem, and they are the part of the file most brokers never revisit after approval.
5. What is the borrower actually paying, in writing, fees included? Given only four of the 28 funds in REP 820 published borrower rate information, assume you will have to ask for it rather than find it.

What to review this week

• List every live file funded by a non-ADI mortgage fund or private credit funder, with the approval date and whether any drawdowns remain.
• For each one, note whether the funder is an ADI. If it is not, note how it is funded.
• Search ASIC’s media releases for each manager’s name. Record the date you checked.
• Check that your file note says why that funder — not only what the rate was.
• Where the loan is regulated credit and you relied on speed or service, check the note substantiates that claim in the terms RG 273.77 describes.
• Ask your licensee whether funder-side checks sit anywhere in your credit policy. For most brokerages, the honest answer is that they do not.
• If your short-term lending has narrowed to one or two funds, start one more accreditation.

What to watch next

Three things. Whether the Murdoch Clarke interim order is revoked, made final or allowed to lapse — the ASCF precedent suggests weeks, not months. The findings of ASIC’s second private credit surveillance, which Commissioner Constant said on 26 October would be released soon. And the end-of-2026 deadline she set in September, which is now roughly two months away and applies to distributors as well as managers.

For brokers, the deeper shift is quieter than any one order. Short-term, land and development lending has moved a long way from the banks over the past decade, and the funders that absorbed it answer to a disclosure regime that is being rebuilt in public, at speed. That is not a reason to stop placing deals there. It is a reason to know, for every funder on your panel, which answer you would give a client who rang on the morning of a stop order — and to have that answer written down before the call comes.