Private credit sector braces for increased regulation
The private credit industry is bracing for increased regulation over the next year, with many firms saying they do not feel well-equipped to meet the upcoming changes.
Four in five private credit executives – around 79 per cent – said they expect increased regulation in the next 12 to 18 months, according to research by Ocorian, while just one in three said private credit fund managers in their jurisdiction are well-equipped to meet regulations.
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The majority also found that only just over a third of executives think private credit regulation in their jurisdiction is “fit for purpose”, while over half (56 per cent) said it needs improvement.
“Whether in Europe or the UK, regulators are tightening their gaze on alternative investment sectors like private credit,” said Abi Reilly, partner and practice lead at Ocorian.
“AIFMD 2.0 is one of the clearest signals yet of that shift in Europe, and the FCA’s own consultation activity hints at similar priorities. Whether this next wave of reforms will deliver the transparency, consistency, and investor protection it promises, while maintaining room for innovation, is something we’ll see play out over time.
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“What’s certain is that the private credit space is entering a more scrutinised phase, and readiness will become a defining feature for successful managers.”
“Regulation, however, has to strike a balance so that growth in the market in response to strong demand is not damaged while investors are also protected,” added Cato Holmsen, chief executive at Nordic Trustee.
