What Is the COFI Bill South Africa?

COFI Bill South Africa represents one of the most significant regulatory developments facing financial institutions and financial services providers today. From a regulatory perspective, it will reshape how authorities assess conduct, how businesses measure customer outcomes, and how governance, incentives, and oversight support fair client treatment in practice.

In practical terms, COFI introduces a fundamental shift in financial services regulation. Rather than focusing purely on compliance documents or technical requirements, it influences how a business is structured, how it is licensed, how leaders make decisions, and how clients experience financial services in real-life situations.

At its core, therefore, the COFI Bill South Africa is designed to improve conduct across the financial sector while consistently driving fair outcomes for customers.

Why this matters

For many years, laws, codes, standards, and sector rules have shaped conduct requirements. However, COFI aims to create a more coherent conduct framework. More importantly, it places stronger emphasis on what clients actually experience and whether institutions treat them fairly on a consistent basis.

As a result, the key question is no longer simply whether a document was issued or a step was followed. Instead, attention shifts to whether the client ultimately received a fair outcome.

Why COFI Bill South Africa Changes Compliance

The COFI Bill South Africa fundamentally changes compliance by shifting the focus away from documents alone and toward evidence of fair treatment in practice. Consequently, financial institutions must demonstrate how their controls, people, systems, and governance arrangements consistently support fair client outcomes.

For FSPs, this shift is particularly important because outcomes-based regulation does not stop at policy wording. Instead, it considers whether policies work in practice, whether staff follow them, whether management provides effective oversight, and whether the client experience reflects fair treatment.

As a result, businesses need more than templates. They also require tangible evidence that conduct controls operate effectively in day-to-day activities.

COFI Bill South Africa and Outcomes-Based Compliance

Historically, many financial institutions have been comfortable with a rules-based approach to compliance. Under this model, the emphasis typically falls on having the correct forms, approved templates, and records kept on file.

Under the COFI Bill South Africa, those elements still matter; however, they are no longer sufficient on their own. Instead, the focus shifts to whether systems, controls, people, and decisions actually produce fair client outcomes.

Simple examples

Rules-based: You issue a disclosure document.

Outcomes-based: The client understands the disclosure and can make an informed decision.

Also rules-based: You complete a Record of Advice.

By contrast, outcomes-based: The advice aligns with the client’s needs and leads to a fair outcome.

Governance and Accountability Under the COFI Bill South Africa

Importantly, COFI makes it clear that conduct is not merely a compliance function. Instead, it is fundamentally a leadership responsibility that sits at the highest levels of the organisation.

Boards or management bodies are therefore accountable for conduct culture and for ensuring that customer outcomes are embedded in both strategic planning and operational decision-making processes.

In other words, conduct risk becomes a core business risk. As a result, it cannot sit only with a compliance officer or remain confined within policy documents; rather, it must be visible in how the business operates every day.

Remuneration and Incentives Under the COFI Bill South Africa

In addition, the COFI framework has important implications for remuneration and incentive structures across financial institutions.

The intention is to reduce poor outcomes that arise from misaligned incentives. Consequently, institutions must assess whether sales targets, commission structures, bonuses, or internal performance pressures encourage behaviour that conflicts with clients’ best interests.

Practical examples of conduct risk

• Pressure on advisers to prioritise sales volume over suitability.
• Incentives that reward product sales without sufficient consideration of client needs.
• Targets that unintentionally encourage rushed advice or inadequate disclosures.

Ultimately, under an outcomes-based framework, remuneration should support responsible behaviour rather than undermine fair customer treatment.

How to Prepare for the COFI Bill South Africa

Preparing for the COFI Bill South Africa begins with assessing whether existing compliance frameworks produce fair client outcomes in practice. This review should include advice suitability, disclosure quality, complaints handling, governance oversight, remuneration structures, and management’s ability to identify conduct risks early.

For many FSPs, a practical first step is moving beyond policy documents and testing real customer outcomes through structured file reviews, management dashboards, and routine conduct monitoring.

In addition, businesses should identify weaknesses early so that management can prioritise corrective action before those gaps evolve into more serious conduct risks.

This Week’s Practical Exercise for the COFI Bill South Africa

Take 15 minutes this week to ask the following questions within your business:

1. Can we demonstrate that our clients understand what they are buying, not just that documents were signed?
2. Do our sales and advice processes consistently lead to appropriate client outcomes?
3. Would management feel confident explaining how customer outcomes influence key decisions?
4. Do our incentives or performance targets create any risk of poor client outcomes?
5. Can we identify where outcomes differ across advisers, teams, or business areas?

Frequently Asked Questions About the COFI Bill South Africa

What is the COFI Bill South Africa?

The Conduct of Financial Institutions Bill South Africa is proposed legislation designed to establish a stronger conduct framework for financial institutions, with a primary focus on fair customer outcomes rather than rules-based compliance alone.

How will the COFI Bill South Africa affect financial services providers?

The COFI Bill South Africa will require financial services providers to demonstrate that their systems, advice processes, disclosures, complaints handling, governance arrangements, and incentives support fair outcomes for clients.

Will the COFI Bill South Africa change licensing requirements?

Yes. The COFI Bill South Africa is expected to influence licensing by linking conduct expectations more closely to business activities, oversight structures, and customer outcomes.

When will the COFI Bill South Africa be implemented?

The FSCA has indicated that the COFI Bill South Africa will be introduced on a phased basis. Therefore, financial institutions have been encouraged to begin preparing well in advance.

External Regulatory Sources

Financial institutions should continue monitoring regulatory developments from the FSCA and broader policy updates issued by the National Treasury.