A signed record of advice can show that an adviser completed the required steps. It cannot, on its own, establish why a recommendation was suitable, whether the client understood the trade-offs, or whether the advice addressed the client’s actual needs.
Lezanne Botha put it plainly at the FIA Advice Summit 2026 on 13 October: completing the paperwork is one thing; showing that the advice was right for the client is another. The senior manager in the Financial Sector Conduct Authority’s Regulatory Framework Department said the shift to outcomes-based regulation would require financial institutions to show not only what they did, but why, and whether it achieved its intended purpose.
“Currently, we ask: Did you follow the process that’s required? But now we must move to asking: What did that process achieve for the customer?” she said.
Botha explained how this approach could change how advice records are assessed, and how the regulator could use information across a business to identify potential problems in how customers are treated.
Cabinet approved the Conduct of Financial Institutions (COFI) Bill for submission to Parliament in March 2026, and on 17 April National Treasury published a notice of intended introduction with an explanatory summary. The Bill itself has not yet been made public. National Treasury has indicated that it will publish the full text after its formal introduction in Parliament, once it has been scrutinised by the Office of the Chief State Law Adviser for certification. Although the FSCA has seen the draft, financial institutions and advisers are still waiting to read it.
After years of development, there is still some uncertainty about the Bill’s final provisions and how they will work in practice. Botha’s comments offer a useful indication of the regulator’s thinking in the meantime.
A signed form doesn’t prove good advice
The COFI framework builds on existing obligations under the Financial Advisory and Intermediary Services Act, including competence, disclosure, conflict-of-interest management, suitability, and acting in clients’ best interests.
Botha said the emphasis would be on showing that these obligations translate into appropriate outcomes for customers.
A signed record of advice, disclosure document, and needs analysis remain important. But having these documents on file does not necessarily mean the customer understood the recommendation, that it suited their circumstances, or that the process helped them to make an informed decision.
The documents need to explain why the adviser recommended a particular product or course of action.
An advice file should set out the client’s needs and circumstances, explain why the recommendation was appropriate, and show which alternatives and trade-offs were considered. It should also record how material costs, risks, exclusions, and limitations were explained, and how conflicts of interest were managed.
Someone reviewing the file should be able to follow the adviser’s reasoning without having to guess why a particular recommendation was made.
“The shift is really moving from documenting what was done to evidencing why it was done and whether it achieved the intended purpose,” Botha said.
The same applies to ongoing service. The record should show not only what was recommended at the outset, but also whether the adviser delivered the service promised to the client.
Looking for patterns beyond individual files
Botha’s comments went beyond individual advice records to the information financial institutions collect and how they use it.
Reviewing a sample of advice files or checking that the compliance function has completed its monitoring activities may not be enough to establish how customers are being treated across the business.
Institutions need to examine information from across their operations, look for patterns that could point to conduct risks, and take corrective action where necessary.
Botha identified several areas that could warrant closer attention:
- Recurring complaints: Are particular products, distribution channels or customer groups generating repeated complaints?
- Cancellations, lapses, and replacements: Are there unusual patterns that could point to problems with the suitability of advice or the way products are sold?
- Claims outcomes: Are customers encountering exclusions or limitations they appear not to have understood when they bought a product?
- Ongoing service: Is the service promised to customers being delivered?
Botha said institutions should be careful not to jump to conclusions based on a single indicator.
“There’s no single indicator in my mind that proves that a customer was treated fairly,” she said. A complaint, policy lapse, or replacement may have a legitimate explanation, so the circumstances matter.
What institutions need to do is look for patterns and investigate what lies behind them. If customers repeatedly misunderstand the same exclusion, for example, it is not enough to check that the disclosure was provided. The institution needs to find out why the message is not getting through and whether something in its sales, advice, or servicing process needs to change.
As Botha explained, the focus is shifting from checking whether compliance steps have been followed to looking at what those steps achieve for customers.
Fair treatment must be evident in the customer journey
The same principle applies to Treating Customers Fairly (TCF). Having policies that support fair treatment does not necessarily mean customers experience it in practice.
Botha said advisers must be able to show how fair treatment plays out in their dealings with individual clients. The advice report, she said, should “really tell a coherent story” about the customer’s needs and circumstances, the options considered, why the recommendation was appropriate, and what ongoing services were agreed to.
That means looking beyond the advice file. Business models, remuneration and incentives, organisational culture, governance and management information can influence how customers are treated.
An adviser may complete all the required documentation, for example, while incentives elsewhere in the business encourage recommendations that are not in the customer’s best interests. A disclosure may also have been provided without the customer fully understanding its implications.
Institutions need to look at whether their processes and controls are working in practice, rather than assume that having them in place is enough. Advice records, customer feedback, claims experience, cancellation patterns, and the delivery of ongoing services can help to establish how customers are being treated.
Professional judgement remains central
Although the shift presents challenges for financial institutions, Botha did not describe it simply as an additional compliance burden.
Technology has made it easier for consumers to access product information and obtain quotations without an intermediary. But access to products alone does not explain the value of professional advice.
“The value proposition of an advisor lies in professional judgement,” she said.
That value lies in understanding a client’s circumstances, explaining difficult trade-offs, and identifying risks the client may not have considered. An advice record should make that work clear: not just which product was selected, but why it made sense for that particular customer.
Institutions need documentation and monitoring systems that capture the substance of this judgement. For advisers, the practical test is whether someone reviewing the file can follow the reasoning behind the recommendation and understand how it was intended to meet the client’s needs.
Botha also acknowledged that the regulator must adapt as the industry changes.
“We are also looking at the way that we supervise and saying what are we achieving as a regulator. So, as you must adapt, so must we,” she said.
