While the Conduct of Financial Institutions (COFI) Bill is intended to create a more coherent, outcomes- and principles-based conduct framework across the financial sector, Financial Sector Conduct Authority Deputy Commissioner Katherine Gibson (pictured) told MPs it will also require substantial preparation within the regulator itself.
Addressing the National Council of Provinces’ Select Committee on Finance on 2 June 2026, Gibson outlined work under way within the FSCA that includes the development of new conduct standards and guidance, changes to licensing arrangements, adjustments to the supervisory model, and additional upskilling and capacity building.
Gibson described COFI as the next step in South Africa’s market-conduct reform journey. She said that while the Financial Sector Regulation Act (FSRA) established the FSCA and set out its powers, responsibilities, and limits, the COFI Bill is intended to create a conduct framework for the financial sector itself.
She said the legislation responds to changes in the structure of the financial sector, where institutions that once operated separately are increasingly part of large groups offering a broad range of products and services, alongside newer digital providers and other non-traditional entrants. In that environment, Gibson said, the traditional approach to regulation had become overly restrictive and had created gaps in the framework.
The move to an outcomes- and principles-based regime will, however, require substantial work by the FSCA.
Building the conduct framework
One of the FSCA’s central tasks will be to develop the subordinate regulatory framework that will sit beneath the legislation. Gibson said this will include conduct standards, joint standards, and guidance notices.
She said the guidance would be needed to set out the authority’s expectations for how high-level principles should be applied in practice. Using the example of product regulation, Gibson said firms would need to be able to show how product design, distribution processes, decision-making, and recourse mechanisms were built around consumer interests rather than only profitability.
She said this would require the FSCA to describe more clearly what it means in practice to design products with consumer interests in mind, how target markets should be understood, what product design processes the regulator would expect, and how firms should identify, monitor and mitigate risks that could cause consumer harm.
Gibson indicated that this work would be important not only for supervision, but also for helping financial institutions understand the regulator’s expectations under a principles-based regime. She also said the shift to a more streamlined framework was intended to make the conduct regime easier to navigate than the existing patchwork of laws and requirements.
A different approach to supervision
Preparing for COFI will also require changes to the FSCA’s supervisory approach. Gibson said the Authority has already started implementing elements of the COFI approach and emphasised that the transition would not be a “big bang” shift from one regime to another.
Instead, she said, the FSCA was already aligning aspects of its supervision with the outcomes-based philosophy that underpins the Bill. She pointed to the authority’s risk model, which is embedded in the FSCA’s Integrated Regulatory System (IRS), and said it incorporates factors such as organisational culture, business model, and operational resilience.
Gibson said those factors had been built into the model because the FSCA’s understanding of risk was increasingly linked to the outcomes-based approach reflected in the new framework. She said the shift was not only significant for the sector, but also “quite a fundamental shift” for the regulator itself.
Earlier in the briefing, FSCA Commissioner Unathi Kamlana described the IRS as part of the Authority’s investment in its technology solutions and said it was intended to help make the FSCA more data- and analytics-driven, while supporting more efficient supervision, enforcement, and licensing.
Investing in systems and capabilities
The preparation effort also extends to organisational capability. Gibson said the authority would need further upskilling and capacity building to understand new products and services and to ensure that staff could apply an outcomes-based approach consistently in supervision and enforcement.
Another significant workstream is managing the transition to the new regime. Gibson said the FSCA has already undertaken a licence-mapping exercise to determine how entities licensed under the current regime would fit into the future framework, and how new activities and entities would be brought into it.
She said the implementation plan would be structured and phased and would be made public. According to Gibson, it would set out how the transition would be managed, which institutions would be affected, and how the new framework would be rolled out over time.
She added that the shift would have budgetary implications for both the FSCA and the financial sector in the short to medium term. However, she said National Treasury has examined the likely impact and that the longer-term cost effects should ease as the framework is phased in and becomes established.
