If the Conduct of Financial Institutions Bill delivers on its outcomes-based ambitions, umbrella funds may face a difficult question: when member outcomes fall short, who carries the accountability – trustees, employers, management committees, sponsors, or all of them?
Those questions surfaced during an Ebnet webinar on COFI’s potential impact on umbrella funds. Fiona Rollason, head of group legal at Alexforbes, Ielyaas Gamiet, joint head: group savings and investments at Allan Gray, Nicola Comninos, group chief investment officer and group risk officer at EasyRetire, and Monique Cloete, head of group retirement solutions at Old Mutual Corporate, debated whether COFI could push governance responsibility beyond traditional trustee oversight and force the industry to rethink how decisions, communication, accountability, and member outcomes are measured.
South Africa’s retirement fund industry has spent the past decade adapting to almost continuous reform. Tax harmonisation, default regulations, T-Day, the two-pot system, governance reforms, and heightened conduct oversight have steadily changed how retirement funds operate and engage with members.
At the same time, employers have continued migrating into umbrella funds, attracted by economies of scale, professional governance, and reduced compliance burdens. Commercial umbrella fund assets alone nearly tripled between 2015 and 2024, increasing from R227 billion to R676bn over the period.
Read: Umbrella funds boom – advisers should assess fit, not just fees
Now the industry is preparing for COFI.
Finance Minister Enoch Godongwana formally gave notice in April of the Bill’s introduction into Parliament. Although the Bill itself has not yet been published, National Treasury has indicated that it will introduce a single conduct framework across financial institutions, centred on governance, fair customer outcomes, accountability, disclosure, and conduct supervision.
Read: Minister gives notice of COFI’s ‘introduction’ in National Assembly
Governance may become harder to outsource
One of the strongest themes emerging from the discussion was that COFI may formalise governance expectations in umbrella funds without formally prescribing governance structures.
Cloete noted that COFI is deliberately principles-based rather than rules-based. The Bill does not require umbrella funds to establish management committees (Mancos) or joint forums, but it does require governance arrangements to be documented, implemented, monitored, and proportionate to the conduct risks and operating model of the fund.
That may naturally push larger umbrella arrangements towards more structured governance.
“The governance architecture actually sits at the board level,” Cloete said, adding that trustees remain responsible for ensuring meaningful reporting, managing customer-related risks, and overseeing member outcomes.
But umbrella funds create a practical challenge: trustees oversee multiple unrelated employers with different workforce demographics, communication needs, and benefit structures.
Cloete suggested two governance paths may emerge.
The first is an advisory model, where a management committee provides insight and feedback, but decision-making remains with trustees. The second is a more formally delegated model where boards allocate certain responsibilities while retaining ultimate accountability. In both cases, she argued, delegation and reporting would need to be clearly documented and monitored.
Gamiet introduced another angle: employers themselves may increasingly be viewed as supervised entities under COFI.
“If the regulator were to ask an employer, are members’ outcomes achieved, it’s hard to see a world where – without a management committee or some form of governance structure – you can actively say yes.”
If employers are expected to demonstrate how member outcomes are achieved, they may require governance structures capable of evidencing decisions, monitoring conduct outcomes, managing complaints, and documenting oversight.
Gamiet suggested employers could increasingly occupy two positions simultaneously: financial customers and supervised entities.
“We are moving into a world where the journey towards retirement will likely have fewer passengers and perhaps more drivers.”
Accountability, conflicts and the question of outcomes
Once governance becomes more distributed, responsibility becomes harder to define.
Several panellists questioned how accountability would operate in an outcomes-based environment.
Historically, umbrella funds allowed employers to transfer much of the governance burden to professional trustees. COFI may not undo that model, but it could require employers, Mancos, and sponsors to play a more active role in demonstrating outcomes.
Gamiet argued that boards remain responsible for core fund architecture – investment strategy, defaults, complaints processes, and ensuring alignment with conduct expectations – while employer structures may increasingly focus on member affordability, engagement, and suitability.
That becomes particularly relevant in open-architecture environments where employers and governance structures influence provider selection.
The discussion repeatedly returned to conflicts of interest.
Rollason argued that COFI effectively pushes the industry beyond identifying and disclosing conflicts towards demonstrating their impact on members.
“You have to take it a step further and say, what is the outcome for the members?” she said.
She highlighted service provider appointments as an example.
Choosing insurers, administrators, investment managers, and other providers can no longer be assessed purely on process, cost, or independence. Trustees and governance structures may increasingly need to show that those decisions improve member outcomes and provide value for money.
Rollason argued that regulators are likely to focus more heavily on transparency, comparability, and evidence that service providers continue delivering what members were promised.
“It’s not also just the appointing them; it’s the ongoing monitoring … You need to have the metrics in place and compare them, get the proper reporting on how your service providers are performing, so you get what it says on the tin,” she said.
At the same time, panellists warned against creating unnecessary governance layers.
Comninos supported COFI’s direction but cautioned that implementation could become performative.
“I’m worried from a risk perspective that it becomes a governance theatre,” she said. “We need to define meaningful accountability.”
She warned that overlapping responsibilities between umbrella boards, Mancos, joint forums, and employers could create duplication without necessarily improving outcomes.
Communication is becoming measurable
The panel also argued that communication may become one of the clearest tests of outcomes-based regulation.
For years, retirement funds have measured communication success largely through distribution: statements issued, campaigns delivered, workshops completed.
COFI may demand more.
Cloete noted that the Bill requires communication that meets members’ reasonable needs, manages expectations, and uses language members can understand.
That shifts attention from activity to evidence.
Gamiet argued that communication success should increasingly be measured through behaviour.
“Success is when members receive their communication, they understand it, they can act on it, and the outcomes reflect improved financial decision-making,” he said.
That could mean measuring:
- engagement with communication channels;
- beneficiary nominations;
- preservation behaviour;
- complaint trends; and
- long-term replacement outcomes.
Comninos argued that financial institutions may need to invest far more heavily in digital capability and financial education.
“We throw jargon around right, left, and centre,” she said. “We need to start speaking English.”
The panel also questioned whether the industry has become too focused on retirement balances rather than retirement outcomes.
Comninos argued that success should be measured not by the amount accumulated at retirement, but by the quality and sustainability of income that members ultimately receive.
“The outcome is not this wad of money at retirement date,” she said. “The outcome is what members are actually receiving.”
What sustainable umbrella funds may look like
As the discussion closed, panellists repeatedly returned to one theme: culture.
Cloete argued that the biggest long-term shift under COFI may not be additional policies or governance paperwork, but a different way of thinking.
“When we start talking around members first, that’s when essentially the culture has moved,” she said.
That may ultimately become the defining test of sustainable umbrella funds. Not whether governance structures exist on paper, but whether they improve member outcomes, surface poor conduct early, manage conflicts transparently, monitor value for money continuously, and adapt communication based on evidence.
The industry has spent years building stronger retirement structures. COFI’s challenge may be proving – with measurable outcomes – that members are genuinely better off because of them.
