ASIC finds Sanlam 'plainly inadequate' in supervision of fintechs
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The news: ASIC has ordered South African financial services conglomerate Sanlam Group to undertake an independent review of its compliance processes after admitting it breached its obligations as an Australian Financial Services (AFS) licencee.
A months-long investigation into Sanlam, first revealed in April by Capital Brief, found it had failed to adequately supervise its many authorised representatives and corporate authorised representatives (CARs). The group, made up of share trading platforms and other investment platforms, collectively boasted more than a million Australian users with more than a billion dollars in assets.
What they said: "At one point, Sanlam had 42 CARs and 71 authorised representatives operating under its licence. Despite this, it had plainly inadequate resources and processes to ensure its diverse cohort of authorised entities complied with the law and to oversee those who used its licence to offer risky financial products to retail clients," ASIC deputy chair Sarah Court said.
"Licensees like Sanlam must have robust compliance processes that are fit-for-purpose to ensure that those who operate under their licence comply with the law and don’t place Australian investors at risk.’
The context: Sanlam and others in the industry run a "license for hire" model where they effectively rent out their AFSL to other financial services companies and take on the supervisory and compliance obligations for them. However experts and industry insiders have become concerned that it has allowed "cowboys" to operate with little oversight, putting customers at risk.
The source: ASIC
