ASIC RG 45 — ASIC Regulatory Guide – RG 45 Mortgage schemes: Improving disclosure for retail investors

Page 1 REGULATORY GUIDE 45 Mortgage schemes: Improving disclosure for retail investors March 2026 About this guide This is a guide for responsible entities, compliance committees, compliance plan auditors, valuers, publishers and others involved with the issue or advertising of interests in mortgage schemes. It sets out ASIC’s benchmarks and disclosure principles for improved disclosure to retail investors to help them understand and assess unlisted mortgage schemes, while maintaining the flexibility of the public fundraising process. It also sets out the standards we expect responsible entities and publishers to meet when advertising unlisted and listed mortgage schemes that are offered to retail investors. Page 2 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 2 About ASIC regulatory documents In administering legislation ASIC issues the following types of regulatory documents. Consultation papers: seek feedback from stakeholders on matters ASIC is considering, such as proposed relief or proposed regulatory guidance. Regulatory guides: give guidance to regulated entities by:  explaining when and how ASIC will exercise specific powers under legislation (primarily the Corporations Act)  explaining how ASIC interprets the law  describing the principles underlying ASIC’s approach  giving practical guidance (e.g. describing the steps of a process such as applying for a licence or giving practical examples of how regulated entities may decide to meet their obligations). Information sheets: provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. Reports: describe ASIC compliance or relief activity or the results of a research project. Document history This version was issued in March 2026 and is based on legislation and regulations as at the date of issue. In March 2026, we made amendments to reflect renamed Regulatory Guide 168 Product Disclosure Statements: Disclosure and other obligations (RG 168), remove out-of-date information and align with current style and drafting practices. Previous version:  Superseded Regulatory Guide 45, issued 2 September 2008 and May 2012 Disclaimer This guide does not constitute legal advice. We encourage you to seek your own professional advice to find out how the Corporations Act and other applicable laws apply to you, as it is your responsibility to determine your obligations. Examples in this guide are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements. Page 3 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 3 Contents A Overview ........................................................................................... 4 Improved disclosure for unlisted mortgage schemes ........................ 4 Who this guide applies to................................................................... 5 Benchmarks and disclosure principles for unlisted mortgage schemes............................................................................................. 6 Advertising standards for all mortgage schemes............................... 8 B The unlisted mortgage scheme sector ........................................ 10 Business models of mortgage schemes .......................................... 10 Risks to investors ............................................................................. 11 C Benchmarks for unlisted mortgage schemes............................. 14 Benchmark 1: Liquidity .................................................................... 14 Benchmark 2: Scheme borrowing ................................................... 16 Benchmark 3: Loan portfolio and diversification .............................. 16 Benchmark 4: Related party transactions ........................................ 17 Benchmark 5: Valuation policy ........................................................ 17 Benchmark 6: Lending principles—Loan-to-valuation ratios ........... 18 Benchmark 7: Distribution practices ................................................ 19 Benchmark 8: Withdrawal arrangements ........................................ 20 D Disclosure principles for unlisted mortgage schemes .............. 22 Disclosure Principle 1: Liquidity ....................................................... 22 Disclosure Principle 2: Scheme borrowing ...................................... 23 Disclosure Principle 3: Loan portfolio and diversification ................ 24 Disclosure Principle 4: Related party transactions .......................... 26 Disclosure Principle 5: Valuation policy ........................................... 27 Disclosure Principle 6: Lending principles—Loan-to-valuation ratios 27 Disclosure Principle 7: Distribution practices................................... 28 Disclosure Principle 8: Withdrawal arrangements ........................... 29 E Form and method of disclosure ................................................... 33 Method of disclosure ........................................................................ 33 Implementing improved disclosure .................................................. 37 ASIC review of PDSs and ongoing disclosure................................. 37 F Advertising standards for all mortgage schemes ...................... 38 Standards for advertisements .......................................................... 38 How ASIC deals with contraventions ............................................... 42 The role of publishers and the media .............................................. 42 G Compliance plans .......................................................................... 44 The compliance plan ........................................................................ 44 Compliance committees .................................................................. 45 Compliance plan auditors ................................................................ 46 Appendix: Example of disclosure against the benchmarks ............. 47 Key terms ............................................................................................... 51 Related information ............................................................................... 54 Page 4 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 4 A Overview Key points ASIC has developed eight benchmarks and eight disclosure principles for unlisted mortgage schemes that can help retail investors understand the risks, assess the rewards being offered and decide whether these investments are suitable for them. Responsible entities of unlisted mortgage schemes in which retail investors invest should: • disclose against the benchmarks on an ‘if not, why not’ basis (see Section C); and • address the disclosure principles (see Section D). Responsible entities should include this information in any Product Disclosure Statements (PDSs) and ongoing disclosure for these schemes. They should communicate this information in the most effective way possible (e.g. by website or regular updates): see Section E. We have also set standards for advertising of all mortgage schemes (whether listed or unlisted) to retail investors: see Section F. Those involved with mortgage schemes (e.g. compliance committees, compliance plan auditors and valuers) should consider these disclosure and advertising obligations when carrying out their responsibilities: see Section G. Improved disclosure for unlisted mortgage schemes RG 45.1 We have developed eight benchmarks and eight disclosure principles that apply to all unlisted mortgage schemes in which retail investors invest: see Table 1. We expect unlisted mortgage schemes to: (a) disclose whether the benchmarks (as applicable) are met and, if not met, provide an explanation on an ‘if not, why not’ basis (see Section C and RG 45.13–RG 45.15); (b) address the disclosure principles (see Section D and RG 45.16– RG 45.17); and (c) ensure that any advertising supports the benchmarks and disclosure principles in the PDS (see Section F). Note: References to ‘advertising’ and ‘advertisements’ in this guide should be read broadly. The definitions include comments and promotions of mortgage schemes in media programs or publications (generally known as ‘advertorials’) and statements about mortgage schemes responsible entities publish on their websites that they intend to promote the scheme to retail investors. The definitions do not, however, include statements in the PDS. Page 5 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 5 RG 45.2 Failing to meet one or more of the benchmarks does not mean that a particular mortgage scheme is necessarily a poor investment. However, responsible entities should provide additional disclosure to investors to address that benchmark on an ‘if not, why not’ basis so that investors can assess the impact of failure to meet that benchmark on their investment decision. RG 45.3 Disclosure is not designed to stop retail investors from taking investment risks, but to help them understand the risks involved in any particular investment or type of investment. This enables them to make an informed decision about whether the potential reward (the return on their investment) is balanced against the level of risk involved, and whether they are prepared to take on that risk. RG 45.4 We believe that our approach balances: (a) the need to improve disclosure to allow investors to make better informed decisions; and (b) the desirability of not unduly interfering with this market as a market for raising capital. Note: The need to strike an appropriate balance between protecting investors’ interests and allowing markets to operate freely is part of ASIC’s mandate under the Australian Securities and Investments Commission Act 2001 (ASIC Act). RG 45.5 This approach should also lead to more comparable disclosure for unlisted mortgage schemes, helping investors to compare investments in this sector. Who this guide applies to RG 45.6 For the purposes of this guide, a ‘mortgage scheme’ is a managed investment scheme that has, or that is likely to have, at least 50% of its non-cash assets invested in mortgage loans and/or unlisted mortgage schemes. Mortgage loans are loans secured by a mortgage over real property (including residential, commercial, industrial or retail property, or vacant land). RG 45.7 We expect responsible entities of unlisted registered mortgage schemes in which retail investors invest directly or indirectly (e.g. through an investor directed portfolio service) to disclose against the benchmarks and address the disclosure principles as discussed in Sections C and D. RG 45.8 We also expect responsible entities of both listed and unlisted registered mortgage schemes to follow the advertising standards in Section F. RG 45.9 We expect other parties involved with issues of interests in unlisted registered mortgage schemes or advertisements for registered mortgage schemes generally to support the principles in this guide. This includes compliance committees, compliance plan auditors, valuers, publishers and Page 6 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 6 media. For example, we expect compliance plans for mortgage schemes to set out adequate measures to ensure compliance with the disclosure and advertising standards in this guide: see Section G. RG 45.10 We expect that a feeder fund would take into account information about the underlying fund(s) it plans to invest in when making a decision to invest in the fund(s). We consider it is important that feeder funds provide disclosure for the fund because the risks associated with investing in the feeder fund may differ from the underlying fund(s). RG 45.11 Accordingly, the feeder fund should have information about the underlying fund(s) in which it has a material investment (or make reasonable endeavours to procure the information) and that is pertinent to the benchmarks and disclosure principles. If the information is not available, the responsible entity of the feeder fund should disclose this and explain why. We recognise that disclosure relating to loan portfolio and diversification, and valuation policies, may not be appropriate at the feeder fund level, in which case the feeder fund should provide disclosure on a ‘look through’ basis. Benchmarks and disclosure principles for unlisted mortgage schemes RG 45.12 Table 1 provides a summary of the eight benchmarks and eight disclosure principles that apply to all unlisted mortgage schemes in which retail investors invest. Table 1: Benchmarks and disclosure principles for unlisted mortgage schemes in which retail investors invest 1. Liquidity Benchmark 1 and Disclosure Principle 1 apply only to pooled mortgage schemes and address the scheme’s ability to satisfy its expenses, liabilities and other cash flow needs, including the preparation of 12-month cash flow estimates that the directors approve. 2. Scheme borrowing Benchmark 2 and Disclosure Principle 2 address the scheme’s policy on borrowing, including the scheme’s actual and intended borrowing. 3. Loan portfolio and diversification Benchmark 3 and Disclosure Principle 3 apply only to pooled mortgage schemes and address the scheme’s lending practices and portfolio risk, including concentration risk. 4. Related party transactions Benchmark 4 and Disclosure Principle 4 address the risks associated with related party lending, investments and transactions, including details of any related party transactions. 5. Valuation policy Benchmark 5 and Disclosure Principle 5 address the scheme’s valuation practices, including when an independent valuation is required. Page 7 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 7 6. Lending principles— Loan-to-valuation ratios Benchmark 6 and Disclosure Principle 6 address the scheme’s lending practices, including the loan-to-valuation ratios. 7. Distribution practices Benchmark 7 and Disclosure Principle 7 address the transparency of the scheme’s distribution practices, including whether current distributions are paid from scheme borrowings, and disclosure of the source of distributions. 8. Withdrawal arrangements Benchmark 8 and Disclosure Principle 8 address the transparency of the responsible entity’s approach to withdrawals of investments when the scheme is liquid and when the scheme is non-liquid. Disclosure against the benchmarks: ‘If not, why not’ RG 45.13 Responsible entities of unlisted mortgage schemes in which retail investors invest should disclose against the benchmarks in Section C on an ‘if not, why not’ basis. This means providing a clear statement that the scheme either: (a) meets the benchmark; or (b) does not meet the benchmark and providing an explanation of how and why the responsible entity deals with the business factors or issues underlying the benchmark in another way. RG 45.14 ‘Why not’ means explaining how a responsible entity deals with the business factor or issue underlying the benchmark, including the alternative systems and controls the responsible entity has in place to deal with the issue underlying the benchmark. RG 45.15 If a benchmark contains multiple requirements, responsible entities should address all elements of the benchmark and the required disclosure (i.e. it is not usually sufficient for the entity to explain in general terms why they have not met a benchmark or to address only some aspects of a benchmark). Additionally, responsible entities should make disclosure on the basis that a benchmark is either ‘met’ or ‘not met’. If a benchmark is not fully met, it is regarded as ‘not met’ (rather than partially met) and responsible entities should explain why the benchmark is not met. Disclosure principles RG 45.16 The purpose of the disclosure principles is to improve the consistency and quality of disclosure by responsible entities of unlisted mortgage schemes and to enhance investor confidence. We have explained the disclosure principles further in Section D. RG 45.17 The disclosure principles apply to information that retail investors reasonably need to know to make an informed investment decision and monitor whether the scheme is meeting their expectations. Page 8 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 8 Note: Responsible entities should also refer to the Good Disclosure Principles and other obligations outlined in Regulatory Guide 168 Product Disclosure Statements: Disclosure and other obligations (RG 168). Advertising standards for all mortgage schemes RG 45.18 Experience indicates that retail investors who are thinking about investing place particular emphasis on the information and impressions given in advertisements. Some of the advertisements we have observed for mortgage schemes have not given a realistic impression of the scheme, its features and risks. RG 45.19 To promote investor understanding of mortgage schemes and minimise the risk of mis-selling, we have set standards for responsible entities when advertising their mortgage schemes: see Table 2 and Section F. These standards apply to all mortgage schemes (whether listed or unlisted) that are offered to retail investors. RG 45.20 While the primary responsibility for advertising material rests with the organisation placing the advertisement, under general law the publisher or other media conduit may also have some responsibility for its content. Therefore, we expect publishers and the media to support these standards when accepting advertisements for mortgage schemes. RG 45.21 The standards we have set for responsible entities when advertising mortgage schemes seek to reduce the risk that advertisements will give retail investors messages about mortgage schemes that are inconsistent with disclosure in a complying PDS. Note: For more information about legal requirements on advertising and ASIC expectations, see Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance (RG 234). Table 2: Advertising standards for mortgage schemes (whether listed or unlisted) offered to retail investors Area Summary of standard Repayment of principal investment To avoid common misconceptions about the risk profile of mortgage schemes, advertisements should include a prominent statement to the effect that investors risk losing some or all of their money. Returns on investment and investment ratings Advertisements should only quote returns if prominent disclosure that there is a risk that the investment may achieve lower-than-expected returns accompanies the return. Advertisements should only quote investment ratings if the advertisement properly explains the rating and does not create a misleading impression about the scheme. The advertisement should state that investment ratings are only one factor that investors should consider when deciding whether to invest. Page 9 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 9 Area Summary of standard Comparisons with bank deposits and ‘risk-free’ suggestions Advertisements should state that a mortgage scheme is not a bank deposit. They should not suggest that:  a mortgage scheme is, or compares favourably to, a bank deposit; or  there is little or no risk of the investor losing their principal or not being repaid. Withdrawal periods, withdrawal rights and investment periods Advertisements that refer to withdrawal periods, withdrawal rights or investment periods should include details of any restrictions on withdrawals that might apply. Fees Advertisements that state the amount of a fee (or that a type of fee is not payable) should include details of any circumstances in which a higher fee applies (or in which the fee is payable). Suitability statements Advertisements should not state or imply that the scheme is suitable for a particular class of investor. Consistency with PDS disclosure Statements in advertisements should be consistent with the corresponding disclosures on that subject matter in the PDS. Telephone inquiries Statements made in response to inquiries are subject to the same regulation about misleading and deceptive conduct as the advertisements. Page 10 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 10 B The unlisted mortgage scheme sector Key points Some features of unlisted mortgage schemes can create risks for investors. Clear benchmarks and disclosure principles can help investors to make informed decisions about these products. Business models of mortgage schemes RG 45.22 A mortgage scheme operates on the basis that: (a) the scheme raises funds by issuing interests to investors. These funds are either pooled and lent by the scheme to various borrowers (pooled schemes) or lent in relation to a specific property (contributory schemes). In both pooled and contributory schemes, the scheme secures loans with mortgages over real property, which may be a first or subsequent mortgage. For pooled schemes, investors do not have an interest in a particular mortgage loan, but have an interest in scheme property as a whole; (b) the return to investors is generally generated by interest payments made by the borrowers to the scheme; (c) investors either invest for a fixed term or can withdraw their investment following a withdrawal request; and (d) the value of an investor’s investment may be subject to change depending on the asset position of the scheme. RG 45.23 Some mortgage schemes may lend funds for construction or property development. For these schemes, the skills and experience of the responsible entity in assessing these activities and selecting appropriate loans are particularly important to the performance of the scheme. RG 45.24 Some mortgage schemes promote that they can provide investors with a level of capital security by committing to pay investors back their initial investment at the end of their investment term. Other schemes promote fixed rates of return. RG 45.25 Some mortgage schemes may lend funds to borrowers and ‘capitalise’ the expected interest payments. This means that the scheme may not be receiving actual cash payments from the borrower over the course of the loan and instead receive the capital and accumulated interest payments at the end of the loan term. Page 11 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 11 RG 45.26 Many mortgage schemes promote that withdrawal requests will generally be satisfied within a relatively short period. Risks to investors RG 45.27 Past experience and our analysis of the mortgage scheme market suggest that features of the operations of some mortgage schemes can hold particular risks for investors. RG 45.28 We have set out the key features and risks in Table 3. These features are not present in every unlisted mortgage scheme that is offered to retail investors. The investment risks described will vary from scheme to scheme and from business model to business model. However, disclosure about these features and risks, including to what extent they are present in a given offering, is relevant for a broad range of schemes. RG 45.29 The benchmarks in Section C and the disclosure principles in Section D address these features and risks to help investors make informed decisions about whether an unlisted mortgage scheme is a suitable investment for them. RG 45.30 We have excluded listed mortgage schemes for the purposes of the benchmarks and disclosure principles because: (a) listed schemes have a secondary market on which an investor can sell their investment; (b) the market supervisor will assess and, if appropriate, admit the interests in the scheme to trading; and (c) the market supervisor will supervise the scheme’s ongoing compliance with any listing rules—in particular, a continuous disclosure regime. Note: The advertising standards in Section F apply to all mortgage schemes, whether listed or unlisted. Table 3: Risk features of unlisted mortgage schemes Risk feature Description What this means Liquidity The liquidity of the scheme is key to its ability to meet its representations about whether investors can withdraw from the scheme and whether it can meet its other ongoing commitments. Liquidity may be at risk because of a mismatch between when the responsible entity represents that it can meet withdrawal requests and cash flows from the underlying businesses or assets to which the scheme has lent funds. Liquidity is frequently heavily dependent on continuing inflows from new investors, borrowings or ‘rollovers’ by existing investors. This is because responsible entities may not be able to easily realise the underlying assets of the scheme within a short period of time. Page 12 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 12 Risk feature Description What this means Scheme borrowing Some schemes borrow against the assets of the scheme to fund distributions, redemption requests or scheme operations generally. If a scheme borrows against the assets of the scheme, investors’ interests in the scheme’s assets will generally rank behind the lender. Investors in schemes with high borrowings face the risk that responsible entities will not be able to make distributions or will suspend withdrawals so that they can meet loan payments. Investors also face the risk that they may lose part or all of their investment if the scheme defaults on these loans. Portfolio diversification The criteria that responsible entities use to decide what loans to make are variable and prone to risk, especially where:  loan-to-valuation ratios are often much higher than for traditional lending; and  the loans made may be highly concentrated to particular types of commercial activities, locations or borrowers. Lack of diversification in the scheme’s loan book may mean that an adverse event affecting one borrower or one type of loan will simultaneously affect the majority of borrowers and therefore put the overall portfolio at greater risk. Related party transactions Some schemes lend to, invest scheme funds in, and transact with, associated companies or businesses. There is an increased risk that responsible entities are less likely to make these transactions on arm’s length commercial terms and that they will not monitor the transaction as robustly as they would a transaction involving unrelated parties. Inconsistency in valuations The valuations that schemes rely on are carried out on a variety of bases, with differing assumptions and instructions. These valuations are fundamental to determining how much the scheme may lend. If valuations are not prepared properly or by appropriately qualified and experienced valuers, it is difficult to assess the risk exposure associated with a loan. It is also difficult to monitor loan-to-valuation ratios on a continuing basis. Lending principles Some schemes may take a more conservative approach than others when determining how much to lend to a borrower relative to the value of the underlying security property. Schemes that lend at a higher loan-to-valuation ratio are more vulnerable to the risk of an adverse change in market conditions where the security obtained from borrowers becomes insufficient to cover the loan. Distribution practices Some schemes fund distributions out of sources other than income, such as borrowings. Where schemes do not source distributions solely from scheme income, there is a risk that these distribution practices may not be sustainable over the long term. This risk may increase if a scheme promotes a fixed return on investments. Page 13 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 13 Risk feature Description What this means Withdrawal arrangements Some schemes promote a short withdrawal period to attract investors, although the maximum period allowed in the scheme’s constitution is much longer. This practice creates the risk that investors do not fully appreciate that responsible entities may refuse their right of withdrawal until a longer period of time has elapsed than the one represented. Misleading advertising Advertising used to promote some schemes helps create unrealistic expectations about investors’ ability to withdraw their investment and the scheme’s relative safety. Even if the PDS highlights risk in an appropriate way, advertising that conveys messages not in line with the regulated disclosure document can undermine the effect of that disclosure. Page 14 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 14 C Benchmarks for unlisted mortgage schemes Key points All responsible entities of unlisted mortgage schemes should address general benchmarks on: • liquidity—pooled mortgage schemes only; • scheme borrowing; • loan portfolio and diversification—pooled mortgage schemes only; • related party transactions; • valuation policy; • lending principles—loan-to-valuation ratios; • distribution practices; and • withdrawal arrangements. This information should be disclosed clearly and prominently in the responsible entity’s PDS and ongoing disclosure: see Section D. Benchmark 1: Liquidity RG 45.31 For a pooled mortgage scheme, the responsible entity has cash flow estimates for the scheme that: (a) demonstrate the scheme’s capacity to meet its expenses, liabilities and other cash flow needs for the next 12 months; (b) are updated at least every three months and reflect any material changes; and (c) are approved by the directors of the responsible entity at least every three months. Note 1: The cash flow estimates should be prepared on the basis of an estimate of zero inflows from new subscriptions for the relevant period. Withdrawals should be determined with reference to the period within which investors would reasonably expect the responsible entity to process withdrawal requests, rather than the maximum period within which the responsible entity is able to process withdrawal requests. Note 2: ‘Cash’ and ‘cash equivalents’ have the same meaning as in Australian Accounting Standard AASB 107 Statement of cash flows. Paragraph 6 of AASB 107 defines ‘cash’ as ‘cash on hand and demand deposits’ and ‘cash equivalents’ as ‘short- term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.’ However, for the purposes of the benchmark, a responsible entity cannot take into account undrawn amounts under bank overdraft or lending facilities. Page 15 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 15 Explanation RG 45.32 For the purposes of this benchmark, ‘liquidity’ is the proportion of cash or cash equivalents in a scheme’s assets. It is a powerful indicator of the ability of the scheme to meet its short-term commitments. For unlisted mortgage schemes, we are particularly concerned with relative liquidity (i.e. short-term assets relative to short-term liabilities). Note: ‘Liquidity’ for the purposes of this benchmark is not the same as being ‘liquid’ for the purposes of Pt 5C.6 (which relates to satisfying a statutory test). It is important that any disclosure to investors does not confuse these two concepts. RG 45.33 Liquidity management is important so that schemes can meet: (a) investor expectations about the payment of distributions; (b) loan commitments drawn in stages by borrowers; (c) changes in the scheme’s operational needs; (d) unexpected expenses of the scheme; and (e) interest on scheme borrowing. RG 45.34 A cash flow estimate is a key tool to measure the ability of a responsible entity of a scheme to meet its short-term commitments. For unlisted mortgage schemes, we are particularly concerned that investor expectations about liquidity align with the capacity of the scheme’s assets to be realised to meet those expectations. RG 45.35 We expect responsible entities to take into account their historical experience on inflows and outflows in estimating their cash flows and to disclose material assumptions underlying their cash flows (e.g. historical inflow and outflow rate) when disclosing against this benchmark. RG 45.36 The cash flow estimates are not required to be disclosed to investors, but we envisage that responsible entities would need to review their estimated cash flows on an ongoing basis, update the estimates and reflect any material changes at least every three months to determine whether they continue to satisfy this benchmark. RG 45.37 We expect responsible entities to periodically ‘stress test’ their liquidity assumptions. For example, we expect responsible entities to consider: (a) their current PDS and the possibility of an ASIC stop order disrupting their cash flows; and (b) the possibility of a significant increase in the rate of investor withdrawal requests. RG 45.38 We expect responsible entities to take into account the results of this stress testing in their liquidity planning. In some cases, this may mean they need to increase their cash position. Page 16 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 16 Benchmark 2: Scheme borrowing RG 45.39 The responsible entity does not have current borrowings and does not intend to borrow on behalf of the scheme. Explanation RG 45.40 Some schemes borrow to finance distributions or the operation of the scheme. It is preferable that responsible entities do not use borrowings as a source to fund distributions and to satisfy withdrawal requests. If this is the case, it is important that the responsible entity makes investors aware and provides them with details of the borrowings and credit facilities the scheme holds. Borrowings that are due to mature within a relatively short timeframe can be a significant risk factor, especially in periods where credit is more difficult and expensive to obtain. It is important that investors understand that they will rank behind creditors of a scheme. Benchmark 3: Loan portfolio and diversification RG 45.41 For a pooled mortgage scheme: (a) the scheme holds a portfolio of assets diversified by size, borrower, class of borrower activity and geographic region; (b) the scheme has no single asset in the scheme portfolio that exceeds 5% of the total scheme assets; (c) the scheme has no single borrower who exceeds 5% of the scheme assets; and (d) first mortgages over real property (including registered leasehold title) secure all loans the scheme provides. Explanation RG 45.42 The primary assets of a mortgage scheme are the loans it makes to others. The quality of these loans and its other investments, and the nature of security taken to support these loans and investments, is a key element in the financial position and performance of the scheme. RG 45.43 The more diversified a loan portfolio is, the lower the risk generally that an adverse event affecting one borrower or one type of loan will simultaneously affect the majority of borrowers and therefore put the overall portfolio at risk. Page 17 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 17 Benchmark 4: Related party transactions RG 45.44 The responsible entity does not lend to related parties of the responsible entity or to the scheme’s investment manager. Explanation RG 45.45 Parties involved in related party transactions (including loans to, and investments in, related parties) are less likely to monitor those transactions as robustly as unrelated parties. This can affect valuations, loan-to-valuation ratios, due diligence and credit assessment processes. RG 45.46 The benchmark focuses on lending transactions (as well as the responsible entity’s policy and practices for lending to related parties) because these appear to be the most common type of related party transaction that affects unlisted mortgage schemes. Benchmark 5: Valuation policy RG 45.47 In relation to valuations for the scheme’s mortgage assets and their security property, the board of the responsible entity requires: (a) a valuer to be a member of an appropriate professional body in the jurisdiction in which the relevant property is located; (b) a valuer to be independent; (c) procedures for dealing with any conflict of interest to be followed; (d) the rotation and diversity of valuers; (e) in relation to security property for a loan, an independent valuation to be obtained: (i) before the issue of a loan and on renewal: (A) for development property, on both an ‘as is’ and ‘as if complete’ basis; and (B) for all other property, on an ‘as is’ basis; and (ii) within two months after the directors form a view that there is a likelihood that a decrease in the value of security property may have caused a material breach of a loan covenant. Explanation RG 45.48 Responsible entities need robust and objective valuations to ensure that the scheme PDS and ongoing disclosures correctly state the scheme’s financial position. This depends on responsible entities adopting rigorous policies as to when, how and by whom valuations are conducted. Page 18 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 18 RG 45.49 It is important for investor confidence that suitably qualified independent experts perform the valuations, and that the process is transparent. RG 45.50 It is also in the interests of a responsible entity that the valuations it obtains and uses are robust and accurate. Responsible entities are responsible for the accuracy of the financial statements and other documents that rely on these valuations. RG 45.51 We expect that, where possible, responsible entities will only use professional valuers who are registered or licensed in the relevant state or territory or overseas jurisdiction, and who subscribe to a relevant industry code of conduct. We also expect that responsible entities will be careful to ensure that their instructions to valuers are comprehensive and contain reasonable assumptions. RG 45.52 It is also important that responsible entities obtain up-to-date valuations for properties over which they are to take security. Responsible entities should also obtain subsequent valuations of existing properties and the scheme’s mortgage assets at relevant times to ensure that the mortgages held in the scheme continue to be appropriately valued. Benchmark 6: Lending principles—Loan-to-valuation ratios RG 45.53 If the scheme directly holds mortgage assets: (a) where the loan relates to property development—funds are provided to the borrower in stages based on independent evidence of the progress of the development; (b) where the loan relates to property development—the scheme does not lend more than 70% on the basis of the latest ‘as if complete’ valuation of property over which security is provided; and (c) in all other cases—the scheme does not lend more than 80% on the basis of the latest market valuation of property over which security is provided. Explanation RG 45.54 A scheme’s approach to loan-to-valuation ratios is one indicator of how conservative or aggressive its lending practices are. Some schemes are willing to lend funds equal to a higher proportion of a property’s value (sometimes up to or exceeding 100% of its value). Such ratios make a scheme more vulnerable to risk in that a change in market conditions (e.g. a downturn in the property market) may mean it is unable to fully recover the money it has lent to borrowers. It also increases the risk that the security obtained from borrowers will be insufficient to cover the loan. Page 19 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 19 RG 45.55 We have separated loans relating to property development from other property-related loans (e.g. residential mortgages). By property development, we mean loans whose main or primary purpose is for real estate developments or construction (e.g. home units, retail, commercial, subdivisions and industrial development). The benchmark loan-to-valuation ratio for property development loans is lower than for other loans because it is calculated on an ‘as if complete’ basis. RG 45.56 If the scheme lends funds for property development activities, the responsible entity may agree to a loan-to-valuation ratio upfront. However, it is generally not appropriate for the scheme to advance all of the funds to the developer upfront. Rather, we expect responsible entities to put systems and controls in place to ensure the scheme only provides funds to the developer where there is satisfactory progress of the development (based on reliable external evidence of that progress). RG 45.57 We expect that, during the term of the loan, the loan-to-valuation ratios will change. The loan-to-valuation ratios in the benchmark refer to the most recent valuation obtained for the relevant property. For second-ranking mortgages, the valuation would be on the basis of the unencumbered value of the property. Benchmark 7: Distribution practices RG 45.58 The responsible entity will not pay current distributions from scheme borrowings. Explanation RG 45.59 Investors need to know how the scheme funds distributions, because this is an important indicator of the performance of a scheme. In some situations, if the scheme funds distributions (either wholly or in part) from sources other than net scheme income (e.g. from borrowings) for the relevant distribution period, this may be cause for concern. It may indicate that the distribution practices are unsustainable over the long term or may be insufficient to meet advertised returns. Accordingly, it is important that responsible entities disclose where the scheme sources distributions from and, where it doesn’t source these from scheme income, explain why. RG 45.60 We understand that, where scheme income is insufficient to meet advertised returns, schemes may fund distributions in a number of different ways (e.g. by reducing their fees, from scheme borrowings or from scheme capital) rather than paying a reduced return. Such practices have developed because competition in the mortgage scheme sector means that many schemes may prefer to meet advertised returns even if that means funding out of capital. Page 20 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 20 Benchmark 8: Withdrawal arrangements Liquid schemes RG 45.61 For liquid schemes: (a) the maximum period allowed for in the constitution for the payment of withdrawal requests is 90 days or less; (b) the responsible entity will pay withdrawal requests within the period allowed for in the constitution; and (c) the responsible entity only permits members to withdraw at any time on request if at least 80% (by value) of the scheme property is: (i) money in an account or on deposit with a bank and is available for withdrawal immediately, or otherwise on expiry of a fixed term not exceeding 90 days, during the normal business hours of the bank; or (ii) assets that the responsible entity can reasonably expect to realise for market value within 10 business days. Non-liquid schemes RG 45.62 For non-liquid schemes, the responsible entity intends to make withdrawal offers to investors at least quarterly. Note: If the scheme is a ‘liquid scheme’, responsible entities should indicate that the ‘non-liquid scheme’ section of this benchmark is not applicable (or vice versa) (see appendix). Explanation RG 45.63 Assets such as mortgage loans that a mortgage scheme holds can be difficult to realise in poor market conditions. Despite this, under the statutory definition of ‘liquid assets’ in s601KA(5) of the Corporations Act 2001 (Corporations Act), these assets could technically be ‘liquid’ if the responsible entity reasonably expects to be able to realise those assets for market value within the period specified in the constitution. RG 45.64 Investors may have expectations that a scheme has sufficient assets to readily support withdrawal requests. However, the scheme may not be able to support these expectations, even if it is technically ‘liquid’—for example, a pooled mortgage scheme that freezes redemptions following a substantial increase in the number of redemption requests. RG 45.65 The benchmark distinguishes between liquid and non-liquid schemes and reflects the differences in withdrawal arrangements that would apply in each case. Page 21 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 21 RG 45.66 For liquid schemes, the benchmark includes a period within which the constitution allows the scheme to pay out withdrawal requests and addresses the nature of the assets held in the scheme where the scheme permits investors to withdraw from the scheme on request. The purpose of the benchmark is to align the withdrawal arrangements of a scheme that is operating as a ‘liquid scheme’ within the meaning of s601KA(4) with investors’ common understanding that a liquid scheme is one that has sufficient realisable assets to meet withdrawal requests on demand. We consider these elements of the benchmark allow investors to better assess the liquidity of a scheme (as promoted to investors) against the actual liquidity of the scheme’s underlying asset base. Accordingly, a scheme that is ‘liquid’ under the Corporations Act will not necessarily meet the benchmark. RG 45.67 For non-liquid schemes, the benchmark includes a requirement for all investors to have the ability to withdraw from the scheme on a periodic basis. Once the scheme becomes non-liquid, there is no statutory limit on the period for which it may remain non-liquid. It is preferable that mortgage schemes provide investors with the ability to withdraw on a periodic basis and, if this is not possible, the responsible entity should clearly inform investors of this. RG 45.68 For contributory mortgage schemes, the benchmark would generally be inapplicable if operators have disclosed that investors have no ability to withdraw from the scheme until the borrower has repaid the loan to which the mortgage relates. Page 22 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 22 D Disclosure principles for unlisted mortgage schemes Key points Responsible entities of unlisted mortgage schemes should apply the disclosure principles as part of their disclosure obligations under Pt 7.9 of the Corporations Act. The disclosure principles also reflect the information required for ongoing disclosure to investors. Disclosure Principle 1: Liquidity RG 45.69 For pooled mortgage schemes, the responsible entity should disclose information about: (a) the current and future prospects of liquidity of the scheme; (b) any significant risk factors that may affect the liquidity of the scheme; and (c) the policy of the scheme on balancing the maturity of its assets with the maturity of its liabilities. Note: If the responsible entity has no reasonable grounds for commenting on the prospects of liquidity, it should state this and explain why to investors. Explanation RG 45.70 The responsible entity’s policy on liquidity management is important. Adequate liquidity is a key feature in the ability of the responsible entities of some mortgage schemes to meet expenses, liabilities and other cash flow needs, including investors’ expectations about their ability to withdraw from those schemes. RG 45.71 The responsible entity should disclose whether it reasonably expects there to be any changes to the scheme’s expenses, liabilities and other cash flow needs that will affect the current and future liquidity of the scheme. For example, we expect responsible entities to explain the impact of an expected large number of quarterly investor withdrawal requests, draw-down of loan commitments or other significant changes to the scheme’s operational needs. Page 23 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 23 Disclosure Principle 2: Scheme borrowing RG 45.72 If the scheme has borrowings, the responsible entity should disclose: (a) for borrowings due in less than two years—the total debts due and their maturity profile, undrawn credit facility and whether refinancing or sale of assets is likely during this period; Note: The responsible entity should make appropriate disclosure about the prospects of refinancing or possible alternative actions (e.g. sale of assets or equity fundraising). If the responsible entity has no reasonable grounds for commenting on the prospect of refinancing or possible alternative actions, it should state this and explain why to investors. (b) for borrowings due in between two and five years—the total debts due and their maturity profile for each 12-month period and undrawn credit facility; (c) for borrowings due after five years—the total debts due; (d) why the responsible entity has borrowed the money, including whether they will use the borrowed funds to fund distributions or withdrawal requests; (e) any material loan covenant breaches; Note: A responsible entity should disclose any information about breaches of loan covenants that is reasonably required by investors and update investors about the status of any breaches through ongoing disclosure. Responsible entities should be aware that, in certain cases, investors would reasonably require information on likely breaches of loan covenants (e.g. if the responsible entity has approached the lender about a likely breach and been informed that the loan is likely to be terminated if the breach occurs). (f) the fact that amounts owing to lenders and other creditors of the scheme rank before an investor’s interests in the scheme; and (g) the risks associated with the scheme’s borrowing and credit facility maturity profile. Note: A responsible entity should explain any risks associated with its borrowing and credit facility maturity profile, including whether it has hedged the borrowings and, if so, to what extent. RG 45.73 A responsible entity should also disclose: (a) the existence and details of any current interest rate and foreign exchange hedging policies of the responsible entity; and (b) whether the scheme’s variable interest rate and/or foreign exchange exposure conforms with these policies. Explanation RG 45.74 It is important that investors understand the borrowing structure of a scheme and the risks associated with the structure. They should also be able to distinguish between schemes that borrow and those that do not. Page 24 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 24 RG 45.75 Responsible entities should also disclose whether they will use borrowed funds to fund distributions or withdrawal requests, since this may indicate that the responsible entity’s policy on distributions and withdrawals is not sustainable over the long term. Information about breaches of loan covenants reasonably required by investors is key risk information in upfront and ongoing disclosure. RG 45.76 The returns of a scheme may be substantially affected by changes in the interest rate and/or foreign exchange rates. It is important for investors to understand the foreign exchange and hedging policies and any material variances between the actual position of the scheme and those policies. Disclosure Principle 3: Loan portfolio and diversification RG 45.77 For pooled mortgage schemes, the responsible entity should disclose the nature of the scheme’s investment portfolio, including: (a) by number and value: (i) loans by class of activity (e.g. development or construction projects, industrial, commercial, retail, residential, specialised property, reverse mortgages); (ii) loans by geographic region; (iii) the proportion of loans that are in default or arrears for more than 30 days; Note: A responsible entity should disclose, by number and value, the proportion of loans that are in both default and arrears if these terms have different meanings in the scheme’s lending policy. (iv) the nature of the security for loans made by the scheme (e.g. first or second ranking); (v) loans that have been approved but have funds that have yet to be advanced and the funding arrangements in place for any of these undrawn loan commitments; (vi) the maturity profile of all loans in increments of not more than 12 months; (vii) loan-to-valuation ratios for loans, in percentage ranges; (viii) interest rates on loans, in percentage ranges; and Note: A responsible entity should also include disclosure about the scheme’s hedging policy in relation to interest rates. (ix) loans where interest has been capitalised; (b) the proportion of the total loan money that the scheme has lent to the largest borrower and the 10 largest borrowers; Note: We acknowledge that, for reasons of privacy or commercial confidence, it may not be appropriate to name the largest borrowers. The responsible entity can disclose the total loan money lent to the 10 largest borrowers as an aggregate amount. Page 25 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 25 (c) the percentage of loans (by value) that the responsible entity has secured with second-ranking mortgages; (d) the use of derivatives (if any); (e) a clear description of the non-mortgage assets of the scheme, including the value of such assets; and (f) the scheme’s diversification policy and how the assets correlate with that policy. RG 45.78 The responsible entity should disclose its policy on the above matters and on how the scheme will lend funds generally. For example, such disclosure should cover: (a) the maximum loan amount for any one borrower; (b) the method of assessing borrowers’ capacity to service loans; (c) the responsible entity’s policy on revaluing security properties when a loan is rolled over or renewed; and (d) the responsible entity’s approach to taking security on lending by the scheme (e.g. the types of security it takes and in what circumstances, and whether the security must be income producing). RG 45.79 If an unlisted pooled mortgage scheme invests in, or may invest in, other unlisted mortgage schemes (whether registered or unregistered), the responsible entity must disclose its policy on investing in those schemes, including the extent to which the responsible entity requires those schemes to meet the benchmarks and apply the disclosure principles in Sections C and D. Explanation RG 45.80 It is important that responsible entities disclose in their PDSs their approach to loan portfolio diversification and the degree of concentration of risk. Most responsible entities will have a firm policy on how and when the scheme will lend funds. This policy should be disclosed as clearly and prominently as possible to help investors monitor the financial position and performance of the scheme over time. RG 45.81 Responsible entities should also disclose the nature of the security for loans made by the scheme (e.g. its ranking, the value of the assets supporting the security and the financial position of any guarantor). Note: If any security rights (e.g. mortgages) held by the scheme have been assigned or transferred to third parties, responsible entities need to disclose this as well. RG 45.82 Investors should know the proportion of loans that are in default or arrears and the scheme’s approach to such loans. The responsible entity is or may be relying heavily on payment of interest and repayment of capital on the loans it has made to pay distributions and withdrawal proceeds to investors, and to maintain the financial position of the scheme. Therefore, investors have a Page 26 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 26 strong interest in the proportion of loans in default or arrears and what the responsible entity is doing to address this. RG 45.83 If a scheme lends to a number of related companies within a group of companies with common directors or ownership, the loans to those companies may be disclosed at an aggregate level on the basis that the borrower group is the borrower. RG 45.84 Investors can also benefit from having useful additional information about the diversity and strength of the scheme’s loan book. It will help investors to know details of ranges for: (a) the maturity profiles of loans; (b) loan-to-valuation ratios; and (c) interest rates on loans. Disclosure Principle 4: Related party transactions RG 45.85 If the responsible entity enters into related party transactions, the responsible entity should disclose details of these transactions, including: (a) the value of the financial benefit; (b) the nature of the relationship (i.e. the identity of the related party, and the nature of the arrangements between the parties, in addition to how the parties are related for the purposes of the Corporations Act—for group structures, the nature of these relationships should be disclosed for all group entities); (c) whether the arrangement is on arm’s length terms, is reasonable remuneration, some other Ch 2E exception applies or ASIC has granted relief; (d) whether member approval for the transaction has been sought and, if so, when; (e) the risks associated with the related party arrangements; and (f) the policies and procedures that the responsible entity has in place for entering into related party transactions, including how they monitor compliance with these policies and procedures. Note: The term ‘related party’ is defined in s228 (as applied to the scheme by Pt 5C.7) and includes the responsible entity. Explanation RG 45.86 The additional disclosure is relevant to all types of related party transactions. Examples of services provided by related parties include investment management, mortgage and legal services. Page 27 REGULATORY GUIDE 45: Mortgage schemes: Improving disclosure for retail investors © Australian Securities and Investments Commission March 2026 Page 27 RG 45.87 It is important that responsible entities disclose in the PDS their approach to related party lending, investments and other transactions. They should also disclose how they assess and monitor such transactions to consider whether they have made the transaction with the same rigour and independence