FAQs

The Conduct of Financial Institutions (COFI) Bill is proposed legislation that will introduce a new approach to regulating market conduct in South Africa’s financial sector. It forms part of the country’s Twin Peaks regulatory framework and aims to create a single, consistent conduct framework for financial institutions.

Rather than regulating different sectors through multiple conduct laws, the COFI Bill introduces a more principles-based approach focused on good governance, fair customer outcomes and accountability. Once implemented, it will affect how many financial institutions are licensed, supervised and expected to demonstrate compliance.

The COFI Bill has not yet commenced. Before it can take effect, it must complete the legislative process and a commencement date must be announced.

In the meantime, the Financial Sector Conduct Authority (FSCA) is expected to continue publishing Conduct Standards, guidance and transitional arrangements to support implementation. Although the Bill is not yet in force, financial institutions should begin preparing now by understanding how the proposed framework may affect their business.

Read more: COFI Timeline

The COFI Bill will apply to a broad range of licensed financial institutions operating in South Africa. This includes Financial Services Providers (FSPs), insurers, banks, retirement funds, collective investment scheme managers, investment managers, credit rating agencies and other entities regulated by the FSCA.

While the overarching principles will apply across the financial sector, the specific conduct obligations and licensing requirements may differ depending on the activities each institution performs.

The COFI Billis expected to replace many of the market conduct provisions currently contained in the Financial Advisory and Intermediary Services (FAIS) Act and other sector-specific legislation.

Instead of regulating market conduct through multiple Acts, COFI aims to establish a single, consistent framework across the financial sector. Existing legislation will remain in force until the COFI Bill and its supporting transitional arrangements come into effect.

Read more: FAIS vs COFI

One of the biggest differences is that the COFI Act moves away from a primarily licence category and product-based approach towards an activity-based licensing framework focused on customer outcomes.

Rather than asking what products a business sells or what FAIS licence it holds, COFI asks what regulated activities the business actually performs. This shift places greater emphasis on governance, conduct risk management and fair treatment of customers throughout the customer journey.

Read more: Understanding the Key Differences Between FAIS and COFI

Activity-based licensing is one of the most significant changes introduced by the COFI Bill.

Instead of authorising businesses based primarily on licence categories, the proposed framework authorises financial institutions according to the regulated activities they perform. This means organisations will need to identify and understand every regulated activity across advice, sales, servicing, administration and support functions before determining their future licensing requirements.

Read more: COFI Licensing Requirements

Regulated activities are the specific financial services and functions that require authorisation under the proposed COFI licensing framework.

These activities are expected to be identified in Schedule 1 of the COFI Bill and may include advice, sales, product servicing, administration and other activities performed throughout the customer journey. Identifying these activities accurately will form the foundation of COFI licensing and compliance.

Not necessarily.

One of the biggest misconceptions surrounding the COFI Act is that existing FAIS licences will simply convert into equivalent COFI licences. Instead, businesses are expected to be assessed according to the regulated activities they perform.

This means two firms with the same FAIS licence today could have different licensing requirements under COFI if their business activities differ.

We are following licensing developments to guide our clients through the transition process.

Read more: COFI Myths & Facts

Read more: COFI Licensing Requirements

Activity mapping helps businesses identify every regulated activity they perform before applying the COFI licensing framework.

By documenting activities across advice, sales, servicing, administration and outsourced functions, organisations can better understand their licensing requirements, governance responsibilities and potential compliance gaps. Many COFI specialists consider activity mapping one of the first practical steps in preparing for implementation.

The COFI Bill introduces several significant changes to South Africa’s market conduct framework, including activity-based licensing, stronger governance requirements, increased accountability for leadership, greater emphasis on customer outcomes and enhanced conduct supervision by the FSCA.

Rather than focusing solely on regulatory compliance, the Bill encourages financial institutions to demonstrate that they consistently deliver fair outcomes for customers.

Although the legislation has not yet commenced, financial institutions can begin preparing by understanding the proposed framework, reviewing their governance arrangements and identifying the regulated activities they perform.

Other important preparation steps include reviewing policies and procedures, assessing customer journeys, documenting outsourced activities, training staff and monitoring guidance issued by the FSCA. Starting early will help organisations transition more effectively when implementation begins.

The COFI Bill is expected to strengthen accountability for representatives and key individuals by reinforcing the importance of competence, governance and customer outcomes.

While many existing Fit and Proper principles are expected to continue, financial institutions will need to ensure that representatives and key individuals operate within robust governance frameworks and support a culture that consistently delivers fair customer outcomes.

The COFI Bill establishes a common market conduct framework across South Africa’s financial sector while recognising that different sectors have different activities and risks.

For example, insurers may see greater focus on product design and claims handling, banks on customer treatment and product governance, and Financial Services Providers on advice processes, customer engagement and conduct oversight. Sector-specific Conduct Standards are expected to provide more detailed guidance over time.

The COFI Bill builds on the principles of Treating Customers Fairly (TCF) by placing customer outcomes at the centre of market conduct regulation.

Financial institutions will be expected to demonstrate that customers are treated fairly throughout the product lifecycle—from product design and distribution to ongoing servicing, complaints handling and post-sale support. The six TCF outcomes remain an important foundation for understanding the conduct expectations that underpin the proposed COFI framework.

As the COFI Bill continues to progress through the legislative process, staying informed is essential.

COFI Central brings together the latest legislative updates, FSCA guidance, Conduct Standards, implementation resources, expert commentary, timelines, practical articles and industry insights in one place. Whether you’re looking for the latest regulatory developments or practical guidance on preparing your organisation, COFI Central is designed to help you navigate the transition with confidence.

Read more: Latest COFI Updates