How the COFI Bill will transform financial advice practices

THE soon-to-be-enacted Conduct of Financial Institutions (COFI) Bill is the next step in South Africa’s outcomes-based, principles-led market conduct regulation. Once it becomes effective, the Act will consolidate conduct-related provisions from across multiple financial services sector laws into a single framework.

- LIZL BUDHRAM

COFI pulls the main conduct duties into one legislative structure, giving the Financial Sector Conduct Authority (FSCA) clear powers to set cross-sector conduct standards and respond to poor customer outcomes. Advice businesses that have spent two decades embedding Treating Customers Fairly (TCF) under the Financial Advisory and Intermediary Services (FAIS) Act should have little trouble adapting to the new legislation.

All financial services providers (FSPs) will be re-licensed under COFI, with the biggest change being a shift from product category to activity-based licensing. Under FAIS, licences were granted by broad product categories; under COFI, authorisations will map to specific activities listed in Schedule 1 of the Bill, including the provision of financial advice. A transition process is envisaged, and existing licences will continue to apply until they are mapped to the new activities — time-frames will be set once the Act commences.