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Kooky
Builder of Shaka, the payment router that pays every agent their commission on closing date.
About Kooky and Shaka →The corporate regulator has stopped three mortgage funds from taking new money while it examines the document they are sold under. In a media release dated Thursday 8 October, the Australian Securities and Investments Commission said it had made an interim stop order on the product disclosure statement issued by Australian Secure Capital Fund Limited for the ASCF Premium Capital Fund, the ASCF Select Income Fund and the ASCF High Yield Fund.
Together the three funds held $251.8 million at 30 June 2026, according to ASIC. They invest in short-term mortgages secured over Australian real property, including vacant land and residential, commercial, retail and industrial sites. The order is interim: ASIC has raised concerns about disclosure and has not made a final decision.
Sources: ASIC media release 26-234MR, 8 October 2026, and ASIC's published guidance on stop orders.
What the order stops
While the order is in force, ASIC says, the company cannot offer, issue, sell or transfer interests in the three funds under the product disclosure statement, usually shortened to PDS. In plain terms, the funds cannot accept new investors or new money through that document.
The release describes the purpose as protecting retail investors from acquiring products under a PDS that "may be defective" and may not be worded and presented in a clear, concise and effective way. Those last three words are the standard the Corporations Act sets for a PDS.
The release does not say that the loans the funds have made are in difficulty, and it does not address the position of people who already hold units. Withdrawals from a managed fund are governed by the fund's constitution and its disclosure documents, not by a stop order on new offers. Trade publications that reported the order on 8 October carried no response from the company.
Related readForeign buyers and non-resident landlords: what federal figures showThe three things ASIC wants explained
ASIC lists three concerns, all about what the PDS tells a reader and none about a specific loan.
| Subject | What ASIC says | Why a reader would want it |
|---|---|---|
| Loan portfolio | Information on the loans and on diversification is not adequately disclosed or clearly presented. | It shows how the money is spread across borrowers, places and property types. |
| Cost of leaving | The document may contain a misleading or deceptive statement and omits the cost of exiting. | It tells an investor what it costs to get money out. |
| Reserve account | An investor reserve account meant to cover impairments and capital losses is not adequately disclosed. | It explains what stands between a bad loan and an investor's capital. |
Source: ASIC media release 26-234MR, 8 October 2026. The third column is this magazine's plain-language reading.
Each concern goes to a question a careful investor in any mortgage fund asks. The first is concentration: a fund with a few large loans to related borrowers carries a different risk from one with many small loans in different markets, even if both advertise the same return. The second is liquidity, the gap between the day an investor asks for money back and the day it arrives, and the price of that exit. The third is the buffer: where a fund keeps a reserve to absorb losses on loans that go wrong, investors need to know how it is funded, how large it is and when it can be drawn on.
ASIC Commissioner Simone Constant put the regulator's position in general terms. "Firms must ensure their disclosures to investors are transparent and support informed decision making," she said.
How an interim order works
A stop order is an administrative tool, not a court judgment. ASIC's guidance describes it as a mechanism that lets the regulator prevent offers being made under a disclosure document when it believes the document contains a misleading or deceptive statement, leaves out required information, or has been overtaken by a new circumstance.
- Interim orderASIC halts offers under the document. An interim order can be made for up to 21 days.
- HearingWithin that period the company can put its case to an independent ASIC delegate.
- OutcomeASIC either lifts the interim order or makes a final stop order on the document.
In this case ASIC says it will consider final orders if its concerns are not addressed in a timely way, and that the company will be able to make submissions before any such decision.
The recent record suggests how these matters often end. According to Business News Australia, interim orders ASIC made earlier this year over two Stratfund products were revoked on 20 July, and orders over three Melbourne Securities Corporation products were revoked on 1 October, in both cases after the companies amended their documents. Those orders concerned target market determinations, the document that says who a product is designed for, and not a PDS.
Related readForeign buyers of Queensland homes: approval, duty and land tax surchargeAn interim stop order is not a finding of wrongdoing
It records that the regulator has concerns about a document and wants offers paused while they are tested. The company has the right to respond, and an order can be lifted once a document is corrected or the concerns are answered.
Where mortgage funds meet the property market
A mortgage fund pools money from investors and lends it to borrowers against property. The borrower pays interest, the fund passes most of it to investors as income, and the mortgage over the land is the security if the borrower does not repay. The funds named in this order lend for short terms.
These lenders have become a sizeable part of how property is financed. ASIC's 2025 update on private credit, as summarised by Business News Australia, estimated the Australian private credit market at about $200 billion, with roughly half of it invested in real estate-related assets. Broker News, citing the property firm CBRE, reports that non-bank lenders now account for an estimated 26 per cent of residential development lending, and that CBRE expects that sector to grow from about $50 billion to $90 billion by 2029.
That places the subject on both sides of the property market. For a developer or a buyer of land who cannot get, or does not want, a bank loan, a private lender is often the alternative, typically for a shorter term. For an investor, a mortgage fund is a way to earn income from property lending without owning a property.
The risks are not the same as those of a rental home. The owner of a rental holds the title to one asset and can see it. An investor in a pooled mortgage fund holds units in a scheme whose value depends on borrowers repaying, on the valuations behind each loan and on the fund's ability to return money on request. Loans against vacant land and construction sites, which ASIC's update singled out as higher risk according to the same summary, depend on a project being finished and sold.
Related readGross and net rental yield: how Queensland investors measure a returnWhy disclosure is the regulator's lever
ASIC has made poor practices in private credit one of its enforcement priorities for 2026. The order of 8 October arose, the release says, from the regulator's surveillance of private credit funds, which looks at how these funds are distributed to retail clients, directly and through advisers, and at fees, margin structures and the handling of conflicts of interest in wholesale funds.
Disclosure is where that surveillance bites for retail funds, because the PDS is the document an ordinary investor relies on. A retail investor cannot inspect a loan book. What they can do is read how many loans a fund has made, how large the biggest ones are, what share is lent against land or construction, what happens when a loan is impaired, and what it costs to leave. If the document does not say, or says it in a way that is hard to follow, the investor is deciding without the facts the law intends them to have.
It is not the first time the regulator has used the power on funds that lend against property. In September 2025, Broker News notes, ASIC made interim stop orders over three La Trobe Financial products, which were later revoked after the firm amended its target market determinations.
What happens next
The interim period is short by design. Within it, the company can make its submissions, amend the document, or both, and ASIC will either lift the order or move to a final one.
For anyone weighing a mortgage fund against direct property, the episode is a reminder of where the comparison starts. A headline return says little by itself. The questions ASIC has put to this document, on diversification, the cost of leaving and the reserve behind the loans, are the ones the regulator expects every such document to answer, and a reader can put them to any fund's PDS. Whether a particular investment suits a particular person depends on their own circumstances, which is a matter for a licensed financial adviser.
Kooky, from Shaka
Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
