December 2025
For some time, the rapid growth of private credit and challenging market conditions have been on the radar of regulators and central banks. Recent high-profile bankruptcies are likely to accelerate firms’ review of their risk management processes and prompt new, more probing questions from regulators.
The below paper explores some of the regulatory drivers in the private credit market and ways that firms can revisit their own processes to address potential regulatory concerns.
The growth of the private credit market has been a success story for the industry and helped support the real economy at a time when bank lending has become partially constrained by regulation introduced following the global financial crises. It was also supported by lower interest rates, resulting in investors seeking more attractive returns.
This growth has further intensified regulatory scrutiny of the industry, which is likely to accelerate following recent market events.
Investors as well as risk and compliance functions within private asset managers are adjusting their perspectives on private credit and increasingly viewing it as one of the riskiest asset classes within the range of private assets under management.
Recent bankruptcies have prompted private credit managers and banks to consider where they may need to tighten up internal arrangements — particularly in the context of invoice and trade finance.
There are various ways that KPMG in the UK can support you with responding to recent market events to help uplift aspects of your private credit business and meet regulators’ expectations.
KPMG consulting professionals can apply private asset sector knowledge and technology solutions to help deliver lasting results. This includes third party system selection and implementation support for covenant data ingestion, reporting and monitoring solutions, and integration into existing systems architecture. In addition, we can help with credit policies, limit frameworks, and defining risk appetite statements.
We can also help with process re-design to support enhanced control operating model across front-to-middle-back office, as well as data architecture and mapping re-design and implementation to support data flow improvements from deal origination to investment exit.
Our professionals within transaction services offer due diligence services throughout the lifecycle of a transaction.
We can provide insights into borrowers and their platforms, ranging from governance to data checks, focussing on the existence and encumbrance of assets pertaining to recent market events.
We can design bespoke due diligence arrangements to coordinate and bring in appropriate expertise across our firm to help mitigate underlying risks in portfolios.
KPMG firms provide robust advice on valuation matters across multiple sectors, deal stages, and client types. Using the latest data analytics, simulations and visualisation tools, we can address the most complex modelling and valuation issues.
We can support compliance with relevant regulatory requirements, meeting regulators’ expectations and designing risk management functions that align with leading practice. This includes enhancing governance arrangements and MI, and the design of stress testing.
We can help you detect, prevent and plan for vulnerabilities and potential defaults and bankruptcies in the private credit market, as well as advising on disputes if or when they arise.
