Australia’s corporate regulator has temporarily banned three private credit products offered by Melbourne Securities Corporation (MSC) as it puts the industry on notice.

The products were offered under the A$39.9bn (£21.2bn) Remara Cash Management Fund, a registered managed investment scheme, the Australian Securities and Investments Commission (ASIC) said in a statement.

ASIC said it had issued stop orders on the products due to “deficiencies” it found in their target market determinations, which are legal documents that describe who a financial product is intended for and how it should be distributed.

The regulator said the actions form part of its ongoing work to address risks in private credit. In a separate statement issued today (22 September), ASIC said the “sector should prepare for enforcement action”.

The moves come following the insolvency of Sydney-based housing developer Bathla Group, which has raised concerns over the A$200bn private credit market in Australia, with about 40 funds having exposure to the company.

According to ASIC, the stop orders are in place for 21 days, with the interim orders preventing MSC from dealing in interests, giving a product disclosure statement for, or providing general financial product advice to retail clients recommending an investment in, the fund’s products.

“Where ASIC identifies concerns that products may be reaching retail investors they were not designed for, we will use our regulatory tools to act swiftly to intervene early, disrupt poor practices and protect investors from potential harm,” said ASIC commissioner Simone Constant on the stop orders.

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The Remara Cash Management Fund invests in short-term notes linked to a pool of Australian credit investments, including AAA-rated and investment-grade securitised public and private residential mortgage-backed securities, asset-backed securities and mortgage-backed securities, ASIC said.

In her statement earlier today, Constant explained that while private credit done well has an important role to play in Australia’s productivity, ASIC has intensified its scrutiny of the sector as “improvement, governance, controls and underwriting standards” have not kept up with the pace of its rapid growth.

“We are now well beyond warnings,” she said. “We have multiple enforcement investigations underway.

“We are undertaking active surveillances across wholesale and retail funds. We’ll publish the findings of our surveillance in the coming months but, regrettably, it’s already clear that practices are not where we need them to be,” she warned.