ASIC halts offers in three Australian mortgage funds over disclosure

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The Australian Securities and Investments Commission (ASIC) announced on Thursday 8 October 2026 that it had made an interim stop order on the product disclosure statement used to offer three mortgage funds. Its media release 26-234MR names the issuer as Australian Secure Capital Fund Limited and the schemes as the ASCF Premium Capital Fund, the ASCF Select Income Fund and the ASCF High Yield Fund.

While the order stands, the company may not offer, issue, sell or transfer interests in the three funds under that document. ASIC says it acted to protect retail investors from acquiring products through a disclosure statement that may be defective, and that may not be worded and presented clearly.

An interim order is a pause, not a verdict. ASIC's release records concerns about a document. It does not say the law has been broken, it makes no statement about the quality of the loans the funds hold, and it says the company will be able to make submissions before any final order is considered. No response from the company appeared in the trade press reports of 8 and 9 October.

ASIC media release 26-234MR, 8 October 2026.

What ASIC ordered and why

According to the release, the three funds invest in short-term mortgages secured over Australian real property: vacant land, residential, commercial, retail or industrial. Together they held A$251.8 million in assets under management at 30 June 2026.

ASIC sets out three areas of concern with the disclosure statement. The first is that it does not disclose information about the funds' loan portfolio and diversification, and that what it does say on the subject is not clear, concise and effective. The second is that it may contain a misleading and deceptive statement and leaves out information about the cost of disposing of an interest in the funds. The third is that it does not adequately describe an investor reserve account, which the release says was set up to cover impairments and capital losses.

Each of these is framed by the regulator as a concern, in the conditional. The release quotes ASIC Commissioner Simone Constant: "Firms must ensure their disclosures to investors are transparent and support informed decision making."

ASIC adds that the order came out of its surveillance of private credit funds. That work looks at how such products reach retail clients, directly and through financial advisers, and at fees, margin structures and the handling of conflicts of interest in wholesale funds.

How a pooled mortgage fund works

A mortgage fund is a managed investment scheme that lends its investors' money to borrowers against property. ASIC's Regulatory Guide 45, reissued in March 2026, defines a mortgage scheme as one that has, or is likely to have, at least 50% of its non-cash assets in mortgage loans or in other unlisted mortgage schemes.

The guide separates two designs. In a contributory scheme, an investor's money goes to a loan on a specific property, and the investor's interest is tied to that loan. In a pooled scheme, the money of all investors is gathered and lent to many borrowers, and each investor holds a share of the scheme's assets as a whole, with no claim on any single loan. Investors receive distributions funded by the interest borrowers pay.

Pooling spreads the effect of one loan going wrong, and it also means the investor depends on the manager's lending decisions across the book. Regulatory Guide 45 lists the features that deserve attention. It notes that liquidity in these schemes is often heavily dependent on continuing inflows from new investors, since a loan cannot be turned into cash at short notice. It warns that a lack of diversification lets an adverse event affecting one borrower weigh on the whole portfolio. It gives the example of a pooled scheme that freezes redemptions after a sharp rise in withdrawal requests. The guide also says these features are not present in every unlisted mortgage scheme.

What a product disclosure statement must contain

A product disclosure statement is the document a retail investor is given before buying into a managed fund. ASIC's Regulatory Guide 168, dated 3 December 2025, summarises what the Corporations Act requires it to cover where applicable: who the issuer is, the fees, the significant risks and benefits, the factors that affect returns, significant tax implications, any cooling-off right, how disputes are resolved and where further information can be found. It must also include anything else that might reasonably be expected to have a material influence on a retail client's decision, and all of it must be worded and presented in a clear, concise and effective manner.

For unlisted mortgage schemes, Regulatory Guide 45 adds eight benchmarks and eight matching disclosure principles. They work on an "if not, why not" basis: the issuer states whether the scheme meets each benchmark and, if it does not, explains how it deals with the underlying risk in another way. A benchmark is either met or not met.

The first concern in ASIC's release sits squarely on the third line of that table. Under the matching disclosure principle, the guide asks a pooled scheme to show its loans by number and value, split by type of activity and by region, with the share in default or arrears for more than 30 days, the ranking of the security, the maturity profile, the range of loan-to-valuation ratios and the proportion lent to the largest borrower and to the ten largest.

Interim and final stop orders

ASIC's release gives the three grounds on which it can issue a stop order on a disclosure statement: the document does not disclose all fees and costs, it omits information that may materially influence a retail client's decision, or it is not worded and presented in a clear, concise and effective manner. Regulatory Guide 168 adds that a statement is defective if it contains a misleading or deceptive statement or leaves out required information.

The same guide explains why an order can arrive without warning. Where delay could prejudice the public interest, ASIC may make an interim stop order without first consulting the issuer, pending the resolution of its concerns at a hearing. The interim order therefore comes before the issuer has put its case.

In the present case ASIC says it will consider making final orders if its concerns are not addressed in a timely manner, and that the company will have an opportunity to make submissions before any such decision. Regulatory Guide 168 describes the usual tools for a fix: a supplementary disclosure statement that corrects or completes the original, or a new statement altogether.

Earlier orders on private credit funds

The order of 8 October is the latest in a run of interim orders on funds that lend privately, and the earlier ones show how such matters tend to close.

The most recent ended in nine days. On 22 September 2026, in media release 26-225MR, ASIC announced interim stop orders on three products offered by Melbourne Securities Corporation Limited under the Remara Cash Management Fund, which held about A$39.856 million at 31 December 2025. Those orders concerned the products' target market determinations, the documents that say which investors a product is designed for. ASIC's update to the same release says it revoked the orders on 1 October 2026 after the determinations were amended: the suggested share of an investor's portfolio was lowered, capital preservation was removed as an objective and the risk rating was raised.

That release also gives the long-run tally. Since the design and distribution regime began, ASIC had issued 99 interim stop orders and two final stop orders under it, and it noted that interim orders under that regime last 21 days unless revoked earlier.

A year earlier the pattern was similar. Money Management reported on 21 October 2025 that ASIC had made an interim order on 18 September 2025 over the target market determinations of La Trobe Financial products, followed by one on the RELI Capital Mortgage Fund. Australian Broker reported on 8 October 2026 that the La Trobe orders were all later revoked after the firm amended its determinations.

The closest precedent for a disclosure statement, as opposed to a target market, is the fourth case in that Money Management report: interim orders on the statements for two unit classes of the TruePillars Investment Fund, a fund of A$14.6 million, where ASIC's concerns included the description of investments, conflicts of interest, fees and statements about loss reserves and withdrawals.

How large property-related private credit is

Mortgage funds are one corner of a much larger market. Report 814, "Private credit in Australia", prepared for ASIC and published on 22 September 2025, estimated the market at around A$200 billion in 2024 and said roughly half of it was real estate-focused finance. The report cites other estimates of A$205 billion and A$213 billion, and puts real estate at 40% to 60% of the total depending on the source.

The same report explains the regulator's interest in property lending in particular. It says property development risk has largely moved from banks to non-bank lenders, calls development lending "effectively negative cash flow lending", since a project earns nothing until it is finished, and says commercial property construction and development carries the greatest potential risk of impairment or credit loss. It also records that liquidity had not been a major issue to date.

Supervision followed. The Adviser reported on 9 October 2026 that an ASIC surveillance report of November 2025 covered 28 funds reviewed between October 2024 and August 2025. ASIC Deputy Chair Sarah Court told the regulator's annual forum on 13 November 2025 that poor private credit practices would be a new enforcement priority for 2026, saying the review showed "significant room for improvement".

A stop order on a disclosure statement asks one question: could an investor reading this document understand what the fund lends on and what leaving it costs?

What happens next

The next step belongs to the company and then to ASIC. The release names two possible paths: the concerns are addressed in a timely manner, or ASIC considers final orders after the company has had the chance to make submissions. It sets no public date for either.

In the Remara case, the revocation was added to the original announcement as an update. Until any such change, the three funds may not be offered under the current statement, and the order itself decides nothing about how the funds have lent or performed.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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