Choosing a Private Credit Lender Wisely

Are you choosing your private credit lender wisely? Discover what to ask to ensure you aren’t taken to the cleaners by your private credit provider.

Private Credit: A Guide to Choosing Your Lender Wisely

In recent years, the private credit industry has emerged as a beacon for those seeking alternatives to traditional bank loans. With its promise of greater flexibility and speed, private lending has attracted many borrowers, from individuals to institutional investors. However, this burgeoning market has not been without its challenges. As the International Monetary Fund (IMF) highlighted in its Global Financial Stability Report of April 2024, the private credit market is in need of “more vigilant regulation and supervision” to safeguard its integrity and protect lenders from potential vulnerabilities.

Important Considerations When Choosing a Private Credit Provider

As the private credit sector evolves, lenders and borrowers must tread carefully and exercise due diligence to ensure they engage with reputable, ethical, and transparent credit providers. Here are the essential considerations and questions we recommend to guide you through the process of choosing a private credit provider that aligns with your financial goals and needs safely.

Licensing and Registration: Your First Line of Defence.

Before entering into any agreement, verify the provider’s credentials. Ensure they hold an Australian Credit License (ACL) or an Australian Financial Services (AFS) Licence. Licensing is a fundamental requirement that signifies the lender’s adherence to the legal and regulatory frameworks designed to protect consumers.

The Importance of AFCA Registration

Registration with the Australian Financial Complaints Authority (AFCA) provides an additional safety net, offering a pathway for dispute resolution, should there be a need. Engaging with a lender registered with AFCA ensures you have recourse when the service or conduct falls short of expectations.

Transparent Financing Sources and Solid Track Records

Understanding where your lender sources its funds can provide insights into its stability and ethical standing. Furthermore, a lender with a documented history of fulfilling its loan commitments indicates reliability and trustworthiness.

Expertise and Due Diligence

Reviewing a lender’s length of operation and market experience can tell you whether they have historically been a good provider or not. While seemingly cumbersome, a rigorous due diligence process is a positive indicator. It shows that the lender is committed to responsibly assessing loan suitability and minimising risks for all parties involved.

Financial Hardship Practices

Life is unpredictable, and financial hardship can affect anyone. Ask about the lender’s policies regarding financial hardship and how they address loan defaults. An ethical lender will seek to work with clients rather than resort to punitive measures immediately.

Avoiding the Traps

Beware of lenders recommending dubious practices, such as setting up a company name for personal loans. Such proposals not only contravene regulations but strip away the protections they afford you.

The Role of Financial Advisors and Brokers

If you need more clarification about navigating the private credit landscape, consider engaging the services of a financial advisor or broker. These professionals can be invaluable in steering you toward reputable lenders and ensuring that your financial needs are met responsibly and ethically.

Why Choose Australian Securities

In a marketplace that demands vigilance, Australian Securities presents a bastion of integrity and reliability. Our heritage, spanning nearly a century since our inception in 1925, is a testament to our commitment to ethical lending and intelligent investing. Licensed and future-facing, we embody the principles of effective oversight and proactive management.

Navigating Regulatory Evolution and Its Impact

As the regulatory environment surrounding private credit tightens in response to calls for increased oversight, Australian Securities is committed to proactive adaptation and unwavering ethical adherence. This positions us to be ready to navigate and thrive within the evolving regulatory requirements. For our borrowers, this means they are partnering with a lender that is committed to compliance and also dedicated to fair, transparent lending practices that safeguard client’s interests.

It’s better not to chance it

In the sea of private credit options, equipping yourself with knowledge and asking the right questions is critical to identifying providers that value transparency, integrity, and ethical practices. In choosing a lender like Australian Securities, you align yourself with a partner dedicated not just to financial gains but to fostering trust and long-term success in Australia’s vibrant financial landscape.

Whether you are looking for a tailored mortgage loan, a complex loan, or to refinance your clients, Australian Securities has you covered. Our Finance team will work closely with you to create a loan that meets your needs.

Still not sure…

Call us at 1300 275 275 to talk to one of our finance managers or lending executives. We prioritise direct communication and personalised support for our clients.

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Michael Clarebrough – Australian Securities Team Member Profile

When you sit down with Michael Clarebrough, you’re immediately struck by his breadth of experience and his pivotal role in shaping Australian Securities into what it is today. With a career spanning over five decades at the firm, Michael’s journey mirrors the evolution of the financial industry itself—from the days of manual mortgage documentation and ‘plug and talk’ phone systems to leading technological and procedural advancements in the sector. His knack for devising pragmatic solutions to complex challenges has propelled Australian Securities forward and contributed significantly to wider industry practices.

Michael’s story is of constant learning, innovation, and an unwavering commitment to fostering a supportive, people-centric culture within Australian Securities. His contributions have been instrumental in developing solutions that help clients overcome their financial hurdles. Beyond his professional legacy, Michael’s approachable manner and profound insights offer a glimpse into the ethos that underpins Australian Securities—a dedication to excellence, innovation, and mutual respect among all stakeholders.

Q&A with Michael

Q&A with Michael was fascinating. He has seen so much change and has been instrumental in some of that change. Here’s what he had to say.

Q. What is your role, and how long have you been at Australian Securities?

I am currently the General Counsel and an Executive Director, a journey that started on 5 February 1973. The finance and investment landscape has evolved dramatically over the last 51 years, and I’ve had the privilege of evolving alongside it, from my early days to becoming CEO in 1986 to pioneering our managed investment schemes.

Q. What do you like most about your role?

One of the most satisfying parts of my work is distilling complex financial situations into actionable, understandable solutions. There’s a unique satisfaction in devising innovative financial products that elevate our standing in the financial community and genuinely deliver results for our members.

It is not uncommon to witness the full cycle of a finance client becoming an investor or a peer choosing to invest with us, and this is profoundly rewarding.

Q. Name one of the most important lessons you’ve learnt throughout your career.

There is an interdependence between investors and borrowers; they need each other. Without the other, they don’t have a mortgage security for income or finance for their business or residence.

Q. Which Australian Securities value do you resonate with the most and why?

The value of professional respect for all stakeholders is a guiding principle that informs how we engage with everyone inside and outside our business. We need to balance the needs of our clients. Without investors, we cannot finance a loan, yet without a fair interest rate, you cannot expect clients to invest.

Q. How do you like to spend your time when you aren’t working?

I like to spend my time away from work in several ways. These include gardening, walking, spending time with friends, and building model ships and dollhouses.

Q.What would you do (for a career) if you weren’t doing this?

That’s a tough question. If I had to pick a new career, it would follow my interests, so perhaps a social worker, a garden landscaper or a builder of model ships and dollhouses.

Q. Do you have a favourite person, book, blog or podcast that has influenced your life and career?

Simon Sinek’s insights on leadership and the principles of TQM have greatly influenced my professional philosophy, particularly the emphasis on quality and productivity. He also taught me to avoid proud, unconsciously incompetent people.

On a personal level, my grandfather, a multifaceted person, a Brigadier in the Australian army and post war dental surgeon who sat on his grandfather’s shoulders outside 80 Collins Street to watch the first motor car drive along Collins Street Melbourne, following a man in a white coat ringing a bell to warn bystanders to be careful. He taught me the value of authenticity and the impact one can make by “just being yourself”.

If there were one piece of advice you would have to share with existing and prospective clients, what would it be?

The KISS principle—Keep It Simple, Stupid—has always been a mantra I live by. The financial world is complex enough; understanding should not be. I urge clients to seek clarity and simplicity in all their dealings. If something doesn’t make sense, ask again. If it still doesn’t make sense, it’s time to GOQ—Get Out Quick! I’ve shared this advice with every client and member.

Leaving a legacy

Michael’s deep-rooted experience and wisdom showcase the legacy he has built at Australian Securities and the forward-thinking ethos that propels the firm toward success.

Want to find out more about us?

Call us on 1300 275 275 to talk to one of our Lending or Finance Managers. We prioritise direct communication and personalised support for our clients.

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