Conduct of Financial Institutions
COFI: An Opportunity to Strengthen Trust in Financial Services
The Conduct of Financial Institutions (COFI) Bill represents one of the most significant overhauls of South Africa’s financial services regulation in recent decades. While much commentary frames COFI as a compliance hurdle, it is more constructive to view it as an opportunity. By creating a single, activity-based piece of legislation to replace a patchwork of sector-specific laws, COFI aims to ensure consistent standards of market conduct across the industry. This shift has the potential to reshape how clients engage with financial services, placing fairness, transparency, and trust at the centre.
Securitas® Financial Group
Why COFI Matters
The Financial Sector Conduct Authority (FSCA) has emphasised that COFI will consolidate existing conduct requirements into one coherent framework. Instead of regulating by institution type (such as banks, insurers, or retirement funds), COFI regulates by activity. This means that any entity conducting the same type of financial activity, whether lending, insuring, or providing advice, will be subject to the same principles of fair treatment and disclosure (EBnet, 2023).
The Bill is expected to be introduced to Parliament in 2026, with a transition period of up to three years to allow financial institutions to align with the new framework (Moonstone, 2024). While this may seem distant, the FSCA has already encouraged institutions to begin transition planning. Early preparation will not only ensure compliance but also allow organisations to use the changes to their advantage.
Securitas® Financial Group
A Client-Centric Approach
At its core, COFI places the client experience first. The legislation requires financial institutions to demonstrate that they treat customers fairly at every stage of the relationship, from product design to disclosure, advice, servicing, and claims handling. For clients, this will mean clearer communication that avoids hidden terms and makes disclosures easier to understand. It will also bring fairer outcomes, ensuring that products are genuinely suited to their needs rather than driven primarily by sales targets. In addition, governance within institutions will be strengthened, providing greater accountability in how decisions affect clients.
According to the FSCA, these principles are not simply “nice to have”; they are measurable standards that institutions will need to evidence in practice.
COFI Bill
A Practical Example
Consider the example of a client purchasing a long-term insurance product. Under the current fragmented framework, the insurer’s obligations may vary depending on the specific regulatory category it falls under. Under COFI, however, the obligations are streamlined and activity-based.
For the client, this means that whether they purchase the product directly from an insurer or through an intermediary, the same standards of fairness and disclosure will apply. If issues arise, for example, disputes about policy terms, the process for addressing them will be clearer and more consistent. The client benefits not just from better protection but from a more straightforward and transparent relationship with their financial service provider.
Securitas® Financial Group
Preparing for the Transition
For institutions, preparation for COFI involves more than simply aligning with a new checklist of rules. It is about embedding a culture of fair treatment into strategy, operations, and governance. The FSCA has stressed that boards and senior management will play a central role in ensuring conduct standards are met (Moonstone, 2024).
Practical preparation may involve reviewing product suites to ensure they are designed with customer needs in mind, assessing communication materials to confirm they are clear and accessible, strengthening data and reporting systems to evidence compliance with conduct outcomes, and training staff so that everyday decision-making reflects COFI’s principles. Institutions that act early will not only manage regulatory risk effectively but also enhance their reputation with clients and stakeholders.
Securitas® Financial Group
What This Means for You
For clients, COFI is designed to increase confidence in financial services. It will provide greater transparency when comparing products, more consistent treatment across providers, and enhanced recourse if something goes wrong. Rather than viewing the Bill as a technical matter reserved for regulators and industry professionals, clients should recognise that COFI is ultimately about strengthening trust. By holding institutions to higher standards, the legislation ensures that financial products and services serve the long-term interests of South Africans.
COFI Bill
Looking Ahead
As the Bill progresses through Parliament, more details will emerge regarding implementation timelines and specific requirements. However, the direction of travel is clear: COFI is about simplifying regulation, aligning standards across activities, and placing client outcomes at the centre of the financial system.
At Securitas® Financial Group, we view COFI not as a hurdle but as a catalyst for positive transformation in the industry, one that aligns with our commitment to fairness, transparency, and client-focused service. By preparing early, both institutions and clients can benefit from a smoother transition and a stronger financial system.
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