Here comes the COFI Bill and this is what it will do for consumers

The COFI Bill is well on its way to ushering in a new era for South Africa’s financial services industry rooted in transparency and fairness when financial products are sold and delivered and stronger consumer protection.

Lizl Budhram, head of advice at Old Mutual Personal Finance, says Old Mutual fully supports the Conduct of Financial Institutions (COFI) Bill and describes it as a progressive and much-needed step toward a more ethical, inclusive and accountable financial sector and a milestone for the financial services industry.

“Supporting the COFI Bill is ultimately about advocating for our advisers and customers, improving sector governance and building toward a more sustainable financial ecosystem that encourages consistency and clarity in how financial products and services are delivered and regulated.”

She points out that as South Africa continues to strengthen its financial regulatory landscape through the Twin Peaks reform process, the COFI Bill stands out as a transformative tool that simplifies and consolidates existing conduct legislation into a single, principle-based, outcomes-driven framework.

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Twin Peaks Model and COFI Bill

The Twin Peaks model, introduced in 2018, reshaped South Africa’s financial regulatory system by establishing two dedicated regulators: the Prudential Authority that oversees the financial soundness of institutions and the Financial Sector Conduct Authority (FSCA) that supervises how financial institutions treat their customers.

Budhram says this dual approach separates prudential oversight from market conduct supervision. She believes that the COFI Bill will benefit consumers as well as financial institutions by creating an environment that promotes transparency, accountability and innovation.

“The COFI Bill is designed to modernise the regulatory environment by shifting away from rigid, fragmented rules towards a unified and coherent system that applies equally across all institutions providing financial services, regardless of their form or sector.”

Once it is enacted, the COFI Bill will replace the conduct provisions in various existing laws and eliminate duplication and conflicting regulatory provisions. This will effectively empower the FSCA to oversee market conduct across the board while reinforcing the core principle of treating customers fairly.

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Key pillars of COFI Bill

According to Budhram, the COFI Bill is underpinned by four key pillars:

• Activity-based regulation: Similar financial activities will be regulated in the same way, regardless of who provides them.
• Principles-based framework: Regulators will set intentions and outcomes rather than prescribing exact steps, offering institutions greater flexibility.
• Outcomes-focused supervision: The emphasis is on delivering fair customer outcomes, not just ticking compliance boxes.
• Risk-based and proportionate regulation: Institutions will be supervised based on the risk they pose to customers and the sector, ensuring fairness and practicality.

Budhram points out that the COFI Bill reflects a deep understanding of consumer protection as well as market realities.

“The FSCA has recognised the strain that constant regulatory changes place on institutions. With the COFI Bill, we get a single, flexible framework that aligns with international best practice and responds to modern risks, from cybercrime to AI-enabled services.”

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COFI Bill catalyst for consumer trust and innovation

She says Old Mutual Personal Finance views the COFI Bill as a catalyst for:

• Enhanced consumer trust through transparent practices and clearer accountability.
• Innovation enablement, particularly in areas like open finance, fintech and artificial intelligence.
• Improved adviser outcomes, as the framework allows advisers to focus on what matters most: client needs and aspirations, rather than compliance complexity.
• Streamlined regulatory transition, allowing institutions to evolve without operational disruption.

“Fittingly, this COFI Bill enables financial services providers to build lasting relationships with customers based on outcomes, not just products. It shifts the mindset from sales to service and from regulation to responsibility”.

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Time to get ready for COFI Bill

Old Mutual urges all financial industry stakeholders, particularly advisers, to take an active role in preparing for the COFI Bill’s rollout by staying informed on the latest draft regulations, understanding the intent behind the legislation to ensure meaningful implementation and engaging early to enable smooth operational adjustments once it becomes law.

“The COFI Bill marks a regulatory turning point, one that promises a more ethical, competitive and customer-focused financial services sector. It lays the groundwork for long-term trust between providers and customers, while positioning the industry to embrace technology and innovation responsibly,” Budhram says.

“South Africa’s regulatory framework has reached a point of maturity. It is time to consolidate, simplify and lead with purpose. The COFI Bill gives us the clarity, cohesion and confidence to do just that.”