ASIC Stops $251.8m Mortgage Funds: Investor Warning
ASIC has frozen three Australian Secure Capital Fund products over defective disclosure concerns. What property investors need to know right now.
The Australian Securities and Investments Commission has blocked Australian Secure Capital Fund (ASCF) from offering units in three of its mortgage funds, citing concerns that the funds' product disclosure statements may be defective.
The three funds — the ASCF Premium Capital Fund, the ASCF Select Income Fund and the ASCF High Yield Fund — held a combined $251.8 million in assets under management as at 30 June. Each fund invests in short-term mortgages secured over Australian property, including vacant land and residential, commercial, retail and industrial sites.
MPA Australia reports that while the order is in place, ASCF cannot offer, issue, sell or transfer interests in the affected funds. The order is not yet final — ASCF has the opportunity to make submissions before ASIC decides whether to impose a permanent stop order.
What ASIC Found in the Disclosure Documents
ASIC's most serious concern is that the product disclosure statement (PDS) may contain a misleading and deceptive statement. Beyond that, the regulator identified three further disclosure failures:
- The PDS does not include the cost of exiting an investment. - It does not adequately explain an investor reserve account set up to cover impairments and capital losses. - It fails to clearly disclose the funds' loan portfolio and its level of diversification.
ASIC Commissioner Simone Constant said the standard of disclosure in private credit — lending by non-bank funds directly to borrowers — needed to be held to a high bar.
"Firms must ensure their disclosures to investors are transparent and support informed decision making, including to help investors understand the strategies and risks of their products," Constant said.
Constant also signalled that this action would not be isolated: the regulator would "act swiftly to protect investors from potential harm" wherever disclosure problems are identified across the sector. Poor private credit practices are one of ASIC's stated 2026 enforcement priorities.
Why the Non-Bank Lending Sector Is Under Pressure
Non-bank mortgage funds like ASCF's products have become a significant source of property finance outside the major banks. The sector accounts for an estimated 26 per cent of residential development lending in Australia, and CBRE projects it will grow from approximately $50 billion to roughly $90 billion by 2029.
For property investors who use non-bank lenders to fund development projects, or who hold units in mortgage funds as part of a broader portfolio, this regulatory action carries practical implications.
**Disclosure quality is now under scrutiny.** This action follows a September 2025 precedent in which ASIC issued interim stop orders against three La Trobe Financial products — orders that were later revoked after La Trobe amended its target market determinations. The pattern is consistent: ASIC identifies a disclosure problem, issues an interim order, and gives the provider the opportunity to fix it. But the disruption of a stop order is real, particularly for investors trying to exit or transfer holdings while the order is in place.
**Compliance pressure may flow through to rates.** As private credit funds adapt to higher disclosure standards, the cost of compliance could put upward pressure on borrowing costs at some non-bank lenders over time. This is worth monitoring if you rely on non-bank construction or development finance for your property portfolio.
What Property Investors Should Do Now
If you invest in or borrow from non-bank mortgage funds, these steps are worth taking.
**Review your product disclosure statement.** If you hold units in any private credit fund, locate the PDS and check that it covers exit costs, the composition of the loan portfolio, and how impairments and capital losses are managed. If any of these areas are unclear, contact the product issuer or your financial adviser for clarification.
**Understand your investor protections.** Non-bank funds are not covered by the Australian government's financial claims scheme, which protects depositors in authorised deposit-taking institutions up to $250,000. Know what protections exist in your specific product before increasing your exposure.
**Compare your lending options.** If you're planning a property investment — whether a straightforward purchase or a development project — it's worth assessing the full range of lenders available and comparing rates and terms carefully. Our investor home loans page provides a current overview of what's on the market.
For investors wanting to understand their borrowing capacity across different lending scenarios, the borrowing power calculator can help you model how your current portfolio affects your capacity to fund the next move.
The ASCF order is not yet final. The company has the opportunity to resolve ASIC's concerns, as La Trobe Financial did in 2025, before any permanent action is taken. But the broader message is clear: ASIC is scrutinising non-bank mortgage products closely, and the standard of disclosure required to reach retail investors is rising.