The Australian arm of South African financial services conglomerate Sanlam Group will need to have its compliance processes reviewed by an independent expert after it admitted to breaching its licensee obligations and provided a court enforceable undertaking (CEU) to the Australian Securities and Investments Commission (ASIC).
ASIC’s investigation into Sanlam Private Wealth Pty Ltd uncovered concerns that the Australian financial services licensee had breached its general obligations, including by failing to adequately supervise its many authorised representatives and corporate authorised representatives (CARs). A number of those CARs were fintechs who offered online trading platforms and crypto-based investment products that posed risks to retail clients.
Sanlam’s representatives offered diverse financial services ranging from traditional share trading to emerging fintech services. Some of its fintech representatives managed large pools of investor assets and serviced large retail client bases.
ASIC’s investigation identified that Sanlam:
- did not have adequate review processes to assess whether its representatives complied with financial services laws,
- had limited risk management systems that did not address the distinct risks for each division of its financial services business,
- had inadequate human resources dedicated to risk management and compliance,
- had an inadequate number of responsible managers with suitable expertise to cover the diversity of the financial services offered by its CARs, and
- failed to implement a training program to assess its authorised representatives’ skills.
As part of the enforceable undertaking, Sanlam must engage an ASIC-approved independent expert to review its systems and processes. It must also provide remedial action plans to ASIC and the independent expert, which ASIC and the independent expert will review to ensure Sanlam is taking appropriate steps to comply with the CEU.
