In a recent African Unity media release, Chief Legal and Compliance Officer at African Unity, Johan Ferreira explains that the COFI Act is also supportive of financial inclusion for all South Africans, a principle that is backed up by National Treasury’s explanatory paper accompanying the COFI Bill. He shares that the paper stresses the role that an efficient financial sector can play in creating greater economic inclusion, especially of historically marginalized people, by fostering growth and creating employment.
“COFI is based on a set of key principles which will focus on achievements within the spirit of the law rather than a tick-box approach to compliance with the letter of the law”, he says.
These principles include that the legislation is:
- Activity based: The Bill provides for regulation and supervision of activities undertaken, regardless of the institution performing the activity, thereby closing the gaps that exist in the current legal framework.
- Principles based: The Bill specifies standards related to the intention of the regulation rather than rules for compliance of the regulation. This will enable the regulator to monitor and enforce the outcomes achieved, i.e. focus on the spirit of the law, rather than the letter of the law.
- Outcomes-focused: The Bill supports the delivery of required policy outcomes and provides for monitoring of the extent to which the outcomes are being achieved and interventions for poor outcomes. This approach requires that the market conduct of licensed financial institutions; the financial sector regulatory framework; and, the effectiveness of the market conduct regulator is tested against the desired financial sector outcomes.
- Risk-based and proportionate: The Bill provides for a risk-based approach to monitoring outcomes. The legislation will enable the regulator to identify areas of greater risk and to address these risks in a proportional manner. This will allow a fairer environment for institutions of different sizes and will encourage new entrants into the market by reducing barriers to entry.
Click here to download the media release.
# Remember to register for our Regulatory Update Workshop where our presenters, Billy Seyffert and Alan Holton, will provide a practical breakdown of the Conduct of Financial Institutions Bill.