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FSCA and Sanlam enter into enforceable undertaking

The Financial Sector Conduct Authority (FSCA) has taken regulatory action against Sanlam Collective Investments (RF) (Pty) Ltd. This follows the findings of the FSCA’s investigation into Sanlam and its administered fund, the Tresor Sanlam Collective Investment Equity Fund.

What lead to the regulatory action?

Board Notice 90 of 2014 (BN90) determines the requirements for portfolios in a Collective Investment Scheme (CIS), including the types of investments included in portfolios, conditions, limits and the manner in which portfolios and securities are added to a CIS.

On 16 May 2019, the FSCA investigated Sanlam and the Fund for a suspected breach of BN90. The FSCA found that the Fund administered by Sanlam failed to comply with BN 90, specifically that the Fund had breached paragraph 3(1)(a)(i)(bb), by investing in excess of the 10% allowable limit in a listed security by referencing an incorrect benchmark that is not an index as defined in BN90.

On 20 December 2020, the FSCA notified Sanlam of its intention to enforce regulatory action. After receiving representations from Sanlam, the FSCA and Sanlam entered into an enforceable undertaking accepted by both parties.

The agreement

Sanlam has agreed to:

  • Insert a factual note in its Minimum Disclosure Document disclosing that the performance of the Fund during 1 December 2017 to 13 November 2020 was achieved due to non-compliance of BN 90.
  • Ensure that the correct index as defined in BN 90 is disclosed in all marketing material distributed to investors
  • Ensure that all funds under its management are compliant with applicable provisions, in particular, that all relevant funds it administer utilise an appropriate index as prescribed in BN 90.

“The Authority is satisfied with the outcome on this matter and continues to execute its mandate of ensuring an efficient financial sector where customers are informed and treated fairly,” according to the FSCA.

A copy of the enforceable undertaking has been published and is available on the FSCA’s website.

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