COFI bill

The Financial Sector Conduct Authority (FSCA) convened its annual Industry Conference on March 19th and 20th. During the event, the FSCA presented various initiatives and facilitated panel discussions with key stakeholders, who provided insights on current issues in the financial sector. A significant topic of discussion was the progress of the Conduct of Financial Institutions (COFI) Bill.

The FSCA has developed a backup plan in case the COFI Bill is delayed again in 2025. This plan includes formal consultations and gradually introducing its subordinate legislative framework.

The final draft of the COFI Bill is in progress and it will go to the Cabinet and then to Parliament.

The COFI Bill is designed to change the regulatory framework. Currently the approach has been more principle based, but it is now moving to a more outcome-driven and principles-based model.

The COFI Bill is set to significantly impact brokers and other financial service providers in South Africa. Here are some key effects:

1. Increased Compliance and Governance: Brokers will need to adhere to stricter compliance standards and governance practices. This includes having robust systems and operational processes in place to ensure fair treatment of customers.

2. Focus on Customer Outcomes: The COFI Bill emphasizes the fair treatment of customers and aims to improve customer outcomes. Brokers will need to align their practices with these principles, which may require changes in how they operate and interact with clients.

3. Operational Changes: Smaller brokerages might face challenges due to the need for more sophisticated systems and processes. Larger firms with established compliance and customer relationship management systems may find it easier to adapt.

4. Market Conduct Regulation: The bill will consolidate and strengthen market conduct laws, replacing many existing financial sector laws. This will create a more consistent and effective regulatory framework for all financial institutions, including brokers.

Overall, while the COFI Bill aims to protect customers and promote trust in the financial sector, it will require brokers to adapt to new regulatory requirements and potentially overhaul their operational practices.