January 2026
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 crisis. However, at the same time it has intensified regulatory and central bank scrutiny of the industry.
High-profile bankruptcies have raised financial stability concerns and prompted more probing questions from regulators. These events are also likely to accelerate asset managers’ and banks’ reviews of their risk management processes and consideration of where they might need to tighten up internal arrangements.
In December 2025, the Bank of England launched its second system-wide exploratory scenario (SWES) exercise. This iteration will focus on how the private markets ecosystem operates under stress and the potential implications for UK financial stability and the UK real economy.
The paper below explores some of the regulatory drivers in the private credit market and ways that firms can revisit their processes to address potential regulatory concerns.
The paper was updated in January 2026 to provide more information on what firms can expect from the Bank of England’s second SWES exercise. The SWES-specific content is also available in a separate PDF.
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.
