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 ASIC.
ASIC’s investigation into Sanlam Private Wealth Pty (Sanlam) 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.
At its peak, Sanlam had 42 CARs and 71 authorized representatives operating under its Australian Financial Services (AFS) license. However, ASIC Deputy Chair Sarah Court noted that Sanlam lacked the necessary resources to oversee such a diverse group effectively. The firm’s compliance measures were inadequate to ensure its representatives adhered to financial regulations.
Court emphasized the importance of licensees maintaining strong compliance frameworks to protect investors. She highlighted that Sanlam’s CARs provided a broad range of financial services, from traditional share trading to newer fintech offerings, with some managing substantial investor assets and large retail client bases.
The ASIC investigation found significant shortcomings in Sanlam’s risk management and compliance systems. The company lacked proper review processes to ensure its representatives followed financial laws, had insufficient risk management systems tailored to its different business divisions, and employed an inadequate number of compliance staff.
Sanlam also failed to appoint responsible managers with the necessary expertise to oversee its CARs and did not implement a structured training program to assess its representatives’ skills.
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
- failed to implement a training program to assess its authorised representatives’ skills.
As part of the CEU, 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.
At one point, Sanlam had 42 CARs and 71 authorized representatives operating under its license,” Sarah Court, ASIC deputy chair, said in a statement.
Despite this, it had plainly inadequate resources and processes to ensure its diverse cohort of authorized entities complied with the law and to oversee those who used its license to offer risky financial products to retail clients.
Sarah Court, ASIC deputy chair
This move follows a similar case in April 2024, when ASIC fined Lanterne Fund Services Pty Ltd A$1.25 mn ($780,000) for failing to provide adequate oversight of its CARs. The regulator has consistently intervened to ensure AFS licensees meet their compliance obligations.
In a separate matter, ASIC recently initiated legal proceedings against United Super Pty Ltd, the trustee of the Construction and Building Unions Superannuation Fund (Cbus Super), over alleged systemic failures in handling death benefits and disability claims. According to ASIC, more than 10,000 members and claimants were affected by claims taking over 90 days to process.
The civil penalty case, filed in Australia’s Federal Court, alleges that between September 2022 and November 2024, Cbus Super failed to act efficiently, honestly, and fairly in managing death benefit and disability insurance claims.
