Research — 10 Nov, 2025

Valuation as a Regulatory Test: What ASIC’s 2025 Reviews Mean for Fund Managers

1.   Introduction

Valuation governance in Australia’s private markets is now firmly on the regulatory agenda.  In September 2025, the Australian Securities and Investments Commission (ASIC) released two reports: Report 814 on Private Credit in Australia and Report 816 on Superannuation Financial Reporting and Audit Findings.  Both pointed to ongoing weaknesses in how unlisted assets are valued and verified.

Report 814 found that many managers in the A$200 billion private credit market lacked independent valuation controls and proper documentation, especially when they also originated the loans. Report 816 highlighted similar issues in superannuation fund audits.

ASIC Chair Joe Longo stated that valuation sits at the core of conduct and governance, not as an administrative task.  He added that higher standards are needed “to lift practices across the sector” and that ASIC “will not hesitate to intervene where progress falls short”. These reports show APRA and ASIC moving in the same direction, treating valuation risk as a core governance issue for Australia’s private markets framework.

This fourth paper in our series looks at the 2025 reviews, their main findings, and what they mean for fund managers and investors.

2.   Regulatory evolution (2020–2024)

Australia’s approach to valuation governance in private markets has evolved through a series of coordinated reviews by APRA and ASIC:

2020: COVID-19 prompts review of valuation practices

The COVID-19 crisis exposed weaknesses in how superannuation funds value unlisted assets such as airports, toll roads, and shopping centres. As lockdowns hit these sectors, funds cut valuations by 5–15 per cent, triggering member switching and liquidity stress. 

On 1 April 2020, APRA and ASIC issued a joint letter urging trustees to ensure valuations of unlisted and illiquid assets “remain appropriate” and are reassessed as market conditions change.  Trustees were reminded to test assumptions and communicate risks clearly. 

The episode revealed how stale valuations distort member equity during shocks and reinforced the need for more frequent, independent revaluations and stronger governance. 

See our detailed commentary on this phase here.

2021: Strengthening governance and transparency 

APRA and ASIC reviews placed valuation governance in the spotlight, exposing weaknesses in trustees oversight of unlisted assets.

APRA’s thematic review of 31 RSE licensees found inconsistent revaluation triggers, over-reliance on external managers, limited board challenge, and conflicts of interest.  ASIC observed failures to control executive investment switching based on valuation timing.

APRA proposed changes to Prudential Standard SPS 530 that would require board approved valuation frameworks, clear accountability, and independent oversight.

Alongside new portfolio holdings disclosure rules announced in November 2021, these steps shifted the focus toward transparency, independence, and closer alignment with international fair value standards such as IPEV. 

See our detailed commentary on this phase here.

2023: Formalising valuation and liquidity governance under SPS 530

On 1 January 2023, APRA’s revised Prudential Standard SPS 530 (Investment Governance) took effect, cementing valuation governance frameworks and liquidity stress testing as core obligations for all RSE licensees. 

Boards must approve valuation policies, define responsibilities, and ensure independent challenge of external manager valuations.  The companion Prudential Practice Guide SPG 530, finalized mid-2023, reinforced expectations for more frequent reassessment of illiquid asset values and stronger board capability. 

This was the first time valuation oversight became a binding prudential requirement. 

See our detailed commentary on this phase here.

2024: Heightened supervisory focus and expanding regulatory scope

In 2024, APRA intensified supervision through a targeted review of valuation and liquidity governance, finding that more than a dozen trustees fell short of SPS 530 and required remediation.

ASIC broadened its conduct lens beyond superannuation to include private credit funds and other unlisted schemes as the market grew.  ASIC noted opaque valuation models, potential conflicts of interest, and weak investor disclosures, signalling that private credit will now face scrutiny similar to the superannuation sector.

3.   Private markets under review: February 2025 consultation

In February 2025, ASIC released Australia’s Evolving Capital Markets, outlining the growing influence of private markets. The paper identified emerging risks and sought feedback on how regulatory settings should evolve to keep these markets transparent, well governed, and resilient.

Key concerns highlighted by ASIC

  • Valuation opacity: Limited price discovery and inconsistent methods hinder fair value assessment and performance comparison.
  • Conflicts of interest: Vertically integrated structures (where the same firm originates, manages, and values assets) may compromise independence and investor outcomes.
  • Liquidity and leverage risks: Open-ended funds often hold illiquid or leveraged assets, raising redemption and funding concerns.
  • Investor protection gaps: As retail and superannuation investors gain exposure to unlisted assets, ASIC questioned whether disclosure and governance are adequate.
  • Regulatory visibility: Sparse reporting and data limit ASIC’s ability to monitor valuation practices and systemic exposures.

“Opacity, conflicts, valuation uncertainty, illiquidity and leverage in private markets are the key risks I am concerned for ASIC to focus on,” - Joseph Longo, ASIC Chairman

Areas where ASIC sought feedback

  • Whether existing valuation, disclosure, and governance frameworks are adequate for today’s market scale.
  • How to strengthen transparency and accountability without hindering capital formation or innovation.
  • The role of independent valuations and external audits in promoting confidence.
  • How to manage conflicts and liquidity mismatches in vertically integrated or open-ended structures.
  • Whether to align public and private market standards, particularly around fair value and investor protection.

4.   Inside the debate: should private markets face greater oversight?

Feedback on ASIC's discussion paper fell into three broad camps: status quo, reform, and middle ground. 

4.1 The case for the status quo

This group argues that the current legal and regulatory framework is adequate and central to how private markets function.  Imposing public market-style rules, they say would erode what makes private markets attractive.

  • Sufficiency of existing regulation:  ASIC already has tools to monitor and enforce compliance and should use them more effectively rather than introduce new broad rules.
  • Economic contribution and innovation:  Private markets fund critical infrastructure, technology, and energy projects, and provide credit where banks cannot.  Advantages such as speed to market and flexible structures depend on a less prescriptive regime than retail funds face.
  • Sophistication of participants:  Institutional investors possess the expertise and leverage to conduct due diligence and negotiate protections, reducing the need for retail-style safeguards.
  • Overlap and cost: Additional ASIC rules could duplicate APRA’s SPS 530, increasing costs and reducing member returns.
  • Competitiveness: Heavier regulation could make Australia less attractive than peers such as Singapore and Hong Kong, which are reducing the regulatory burden.
  • Unique benefits and demand: Private markets offer illiquidity premia, lower correlation with public markets, and long-term horizons aligned with superannuation liabilities.

4.2 The case for reform

Others contend that the rapid growth and opacity of private markets have introduced risks the current light-touch framework fails to manage.

  • Flawed and conflicted valuations: Valuing unlisted assets is subjective and vulnerable to bias.  For example, divergence between listed and unlisted office property returns suggests insufficient markdowns in falling markets, resulting in overstating values and fees.
  • Conflicts of interest: Managers lending to related parties or funding multiple layers of the same capital stack (e.g. senior and mezzanine) risk compromising independence in defaults.
  • Inadequate governance:  Trustees often defer valuation decisions to potentially conflicted asset managers; some submissions called for internal audit or assurance functions to provide independent oversight.
  • Outdated sophisticated investor test: Thresholds set in 2001 (A$2.5 million net assets or A$250,000 income) haven’t been indexed, exposing less experienced investors to complex products without adequate protection.
  • Rising retail exposure: As products reach retail channels, risks around mispricing, leverage, and disclosure rise.

4.3 A middle ground

This camp proposes targeted reforms to improve efficiency, transparency, and protection without altering market structure.

  • Data and transparency: Broader access to private company filings (like the UK's Companies House), expanded reporting on financials and ownership, and coordinated data collection between ASIC and APRA.
  • Modernising capital formation:  Update venture and tech rules (e.g. lift the 50-shareholder cap), reform crowdfunding to permit SAFEs and convertibles, and explore limited trading frameworks such as PISCES for periodic secondary trading.
  • Risk-calibrated regulation: Differentiate oversight by strategy (e.g. venture vs LBO).  Where new rules apply, target retail-accessible funds with clearer disclosure on liquidity, valuation, and fees.  The FSC supports industry-led best practice for valuation and liquidity management.

5. Lessons from ASIC Report 814: valuation governance in private credit

While consultation feedback revealed divergent views, Report 814: Private credit in Australia shows that ASIC is firmly on a reform path.  Nowhere is this clearer than in valuation governance, where ASIC found systemic weaknesses and set explicit expectations for oversight and independence.  The report concluded that weak valuation practices across private credit were undermining the credibility of reported asset values and investor disclosures, and that current approaches “require improvement”.   ASIC also cited deficiencies in impairment recognition, noting that delayed or understated losses can distort fair value reporting.

5.1 Valuation challenges in private credit

  • Infrequent or stale valuations, with some funds relying only on internal assessments without independent review, increasing misstatement risk particularly during market stress.
  • Limited independence and challenge, with deal teams marking their own performance and little board-level scrutiny.
  • Few or no impairments reported despite higher risk exposures, inconsistent with expected credit loss patterns.
  • Methodological weaknesses, including divergent LVR bases and inconsistent treatment of capitalised interest or rent assumptions.
  • Insufficient documentation to demonstrate how fair values are derived.
  • Governance gaps where boards and committees do not systematically challenge valuation outcomes.

5.2 ASIC’s good practice and supervisory expectations

ASIC’s good practice and supervisory expectations

Alongside valuation guidance, ASIC reinforced expectations for fee transparency and related-party transaction disclosure, treating both as supervisory expectations given their potential to distort fair values.

5.3 Interpretation: why this matters for private markets

For private credit managers, valuations now need to be defensible, supported by evidence, and subject to independent review. Boards and trustees should be able to show how assumptions are tested, conflicts mitigated, and results shared with investors. These changes make valuation governance a frontline regulatory concern, closely tied to conduct, investor outcomes, and market confidence.

6. Lessons from ASIC Report 816: audit insights on unlisted assets

In September 2025, ASIC published Report 816: Accounting for Your Super, following its first review of RSE financial reporting and audits since new obligations began in July 2023.  While its scope was broad, the findings on unlisted valuations closely mirrored those in Report 814.

6.1 Valuation and audit findings

ASIC found significant inconsistency in how funds value and disclose unlisted investments, particularly those held through managed investment schemes:

  • Over-reliance on prices from managers without verifying if they reflect fair value.
  • Inconsistent fair value hierarchy classification (Level 2 vs Level 3), reducing comparability.
  • Weak disclosure of methods, assumptions, and sensitivities.
  • Insufficient trustee oversight and challenge of manager valuations, impairment indicators, and data reliability.

On the assurance side, ASIC’s audit review of the five largest audit firms (covering over 80% of the sector) revealed:

  • Inadequate audit evidence to support fair values, with reliance on redemption prices or prior year work rather than testing current period valuation assumptions.
  • Weak testing of fund manager controls and limited alternative procedures when control reports were incomplete.
  • Limited substantive testing of inputs and key assumptions.
  • Excessively high materiality thresholds leaving large valuation variances unchallenged.
  • Documentation gaps around key judgments and reliance on other auditors.

6.2 ASIC’s recommendations and call to action

ASIC urged trustees and auditors to strengthen practices through:

  • Independent testing and validation of unlisted asset valuations, especially where redemption prices are stale or unverifiable.
  • Lower materiality thresholds that reflect member interests and exposure.
  • Fuller, more comparable disclosure of valuation techniques and fair value hierarchies.
  • Closer trustee-auditor collaboration to ensure sufficient audit evidence for unlisted investments.

6.3 Interpretation: why this matters for private markets

Although Report 816 focused on trustees and auditors, the findings apply equally to private market managers. Valuation governance and audit evidence are now connected priorities for regulators.  In practice, managers should expect investors, auditors, and regulators to ask for the same level of documentation and control seen in superannuation funds.  Weak or poorly supported valuations, especially when teams mark their own books, are likely to be viewed as conduct risks.  Together with Report 814, this shows that valuation integrity is now a shared expectation across the market.

7.   Linking Reports 814 and 816

Together, Reports 814 and 816 reveal a single regulatory trajectory. Report 814 focused on valuation governance and conflicts in private credit funds, while Report 816 extended that scrutiny to audit and financial reporting by superannuation trustees. Both reinforce the same principle: valuation is a core governance and conduct obligation.

Across both reviews, ASIC aims to close the loop between how valuations are produced, governed, and assured. What begins as a fund-level valuation and disclosure exercise in Report 814 becomes a test of audit evidence and trustee accountability under Report 816.  The emerging outcome is a system-wide standard for valuation integrity that aligns APRA’s prudential expectations with ASIC’s conduct mandate.

This alignment sets the stage for a more integrated supervisory approach, treating valuation integrity as the foundation of market trust. 

8.   Conclusion

ASIC’s latest reviews show that valuation governance has moved from best practice to a regulatory expectation. Reports 814 and 816 make it clear that fund managers are expected to take a more active role in showing how they ensure valuation integrity.  For valuation and finance teams, this means having frameworks that are independently tested, well-documented, and defensible.  Seeing valuation as part of core governance rather than an administrative task, will help firms meet rising supervisory expectations and build investor confidence.

Update: ASIC Report 820 and 823 - Extending the Valuation Lens

On 5 November 2025, ASIC released two new reports that continue the regulatory focus on valuation and governance in Australia’s private markets. Report 820 reviewed private credit surveillance across retail and wholesale funds and found that many of the same weaknesses identified in earlier reviews persist: limited independence in valuations, poor impairment recognition, and deal teams marking their own books with little oversight. Report 823, which followed soon after, took a broader view of Australia’s capital markets, linking these issues to the wider system of governance and transparency across both public and private markets. It highlighted that weak valuation and disclosure practices in unlisted assets can undermine confidence across the entire financial system, not just in private funds. Together, these reports confirm that valuation integrity is now a market-wide expectation. ASIC’s message is clear: fair value must be supported by evidence, independent challenge, and clear communication to investors. The shift that began with Reports 814 and 816 has now extended across all fund types and market segments, reinforcing that valuation is no longer an operational exercise but a test of governance and market trust.

Appendix

To illustrate how organisations positioned themselves on key regulatory and valuation issues, each submission was categorised by stance on two dimensions: regulation of private markets and valuation governance of unlisted assets. Each submission was classified into one of three positions: 1) status quo – defend the current framework; 2) middle – favour incremental improvement; and 3) reform – propose stronger oversight and new rules.  The charts below summarise the results.

Regulation of Private Markets

Regulation of Private Markets

Valuation Governance of Unlisted Assets

Valuation Governance of Unlisted Assets

Private Market Valuations

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