COFI is coming – and FSPs can’t afford to wait

The Conduct of Financial Institutions (COFI) Bill may still be years from implementation – expected to land in Parliament by early 2026 and come into full effect only by 2028 – but financial services providers would be making a mistake to treat it as a distant concern.

According to practice management and compliance expert Anton Swanepoel, the time to act is now. At a COFI update session hosted by the Financial Planning Institute of Southern Africa (FPI) on 17 June, he warned that FSPs cannot afford to be caught off-guard again, as many were during the roll-out of the FAIS Act.

“I remember being part of that entire process right at the forefront of the FAIS Act promulgation,” Swanepoel said. “How FSPs were not compliant by any stretch of the imagination. It was only when those first FAIS Ombud determinations hit us, that’s when people started to say, ‘Whoa, this legislation is serious.’ We need to up our game. We don’t want a repeat of that.”

He argued that COFI presents a strategic opportunity – not just a regulatory hurdle. FSPs can already start revisiting key business areas and tightening internal processes. The benefits, he said, will be immediate, not just future-facing.

“That’s why, for the thought leaders in this group, do not wait for implementation. If you want to be a market leader in this industry, get your ducks in a row. There are sufficient building blocks that you can already now put in place to continue to be a competitive force in this industry.”

TCF becomes policy

The COFI Bill is a cornerstone of South Africa’s Twin Peaks regulatory model and aims to establish a unified framework for market conduct across all financial institutions. One of its key developments is the formal integration of the Treating Customers Fairly (TCF) outcomes, which were first introduced in 2010 as a set of guiding principles.

“For over 15 years, TCF was subtly implied in section 2 of the General Code of Conduct,” said Swanepoel, referencing the duty to act “honestly, fairly, with skilled care, diligence, and in the interest of clients.” COFI, he said, gives these six TCF outcomes the full force of law.

The shift from principle to enforceable policy is already visible, Swanepoel noted, pointing to Conduct Standard 3 for banks under the Financial Sector Regulation Act (FSRA), which incorporates TCF outcomes directly. He encouraged FSPs to study this standard for a preview of the market conduct rules that will apply under COFI.

“Mark my words,” he said, “those who neglect to integrate systems, processes, and governance principles into their businesses now will face challenges during the transition to COFI.”

He said businesses should focus on what will change – and what won’t – to build a solid foundation for this regulatory shift.

What will change

Swanepoel said the most immediate concern for many FSPs is licensing – and it’s a justified concern.

“I can say, without any fear of contradiction, you will have to re-license your current FSP under the COFI Act,” he stated.

He noted there is active engagement with the FSCA to ensure the new licensing process is less cumbersome than it was under FAIS. Committees representing the industry are pushing for a more efficient, modern system that streamlines administration and accelerates the licensing process.

Another significant change will be in terminology and definitions. Swanepoel explained that the familiar term “key individual” will be replaced with “key person” – a broader concept that includes not only one designated person but also the entire governing body of an institution. The governing body refers to all managers with oversight and decision-making responsibilities, extending accountability beyond a single individual.

A key person, he said, includes directors, executive team members, exco, practice managers, and others in leadership roles. This broader approach will allow institutions to distribute accountability across a wider group, reducing the burden traditionally placed on a sole key individual.

“I think it is a good thing,” he said. “It extends the accountability to a broader base. No longer, if you’re one key individual with 20 advisers, do you alone carry the accountability.”

Swanepoel also pointed out changes in terminology, such as the shift from “client” under FAIS to “financial customer” in the COFI Bill and FSRA. Similarly, the term “product supplier” will become “product provider”. Although these changes may seem minor, he said, they reflect a more integrated approach to oversight and co-management within FSPs.

“These are small, incremental changes – not earth-shattering – but they make a meaningful difference,” he said.

What will not change

Swanepoel said that for client engagement, two outcomes remain key: a great adviser experience and, as a result, a great client experience.

He noted that few FSPs have fully integrated compliance into their engagement processes using technology to automate and streamline workflows – yet this is essential.

“If you get that right, you’re going to see that every conduct standard for compliance is going to help you to get there,” he said. “But you can’t leave it there. You need technology. And looking back at the objective of the COFI Bill, technology, innovative technology, is supported by the entire COFI Bill.”

Swanepoel advised key individuals to simplify and automate compliance to create a seamless adviser experience, which should then be embedded into business operations. This, he said, is already being done successfully by some FSPs.

He emphasised that improving the adviser experience is the foundation of a better client journey. Clunky systems create a knock-on effect, while integrated processes improve efficiency across the board.

“If you succeed in that process, you’re going to benefit from that strategic plan right now, not only under COFI.”

He said about 95% of the principles in the FAIS Act’s General Code of Conduct (GCOC) will carry over into COFI’s conduct standards.

“Why do I say that? Because for the last 21 years we have had the FAIS Act… Do not underestimate how FAIS has prepared you for COFI.”

He noted that these principles have been tested over two decades through legal interpretation in the High Court, Financial Services Tribunal reviews, and legal scrutiny – covering everything from contracts to advice quality.

“We sit with a library full of more than 20 years of principles from the General Code of Conduct that are tried and tested,” he said. “So, under COFI, you are not going to get 20 years of interpretation, deliberation in law, stress-tested by cross-examination.”

Given this well-established foundation, Swanepoel said there is no need for alarm. Section 6 of the GCOC, for example, remains a reliable guide on client engagement. This section lays out the steps for engaging with clients, outlining what constitutes professional behaviour – from the first interaction to the needs analysis and final financial plan.

“So, this under the FAIS Act, in the General Code of Conduct, as well as the framework that has been laid under COFI, those principles will not change.”