The Conduct of Financial Institutions (COFI) Bill marks a decisive shift in how financial services will be regulated in South Africa. Yet COFI should not be misunderstood as simply another compliance regime layered onto an already complex regulatory environment.
At its core, COFI is not about more rules — it is about better conduct.
For financial planning professionals in particular, COFI represents a move away from narrow, procedural compliance towards a holistic, outcomes-based framework that places ethical behaviour, governance, and client interests at the centre of financial services delivery.
From compliance checklists to conduct outcomes
Historically, much of financial services regulation has been interpreted and applied through a tick-box lens: policies drafted, disclosures signed, files completed. While necessary, this approach often failed to answer the most important question — are clients genuinely being treated fairly?
COFI deliberately shifts the focus. It requires financial institutions and advice practices to demonstrate how their culture, governance, remuneration structures, advice processes, and post-sale engagement result in fair client outcomes.
Compliance is no longer about form alone, but about substance.
This is consistent with the Treating Customers Fairly (TCF) framework, which has shaped financial planning standards in South Africa for over four decades. Where TCF outcomes were previously aspirational or principles-based guidance, COFI codifies these expectations into law.
What changes — and what does not
For ethical, client-centric financial planners, COFI does not fundamentally change what they do. It changes the level of accountability attached to it.
Financial planning professionals have long been required to act honestly, fairly, and with due skill, care, and diligence under the FAIS General Code of Conduct. COFI builds on this foundation by extending conduct expectations beyond individual advice interactions to the full product and service lifecycle — from design and target-market identification to distribution, servicing, complaints handling, and review.
In other words, suitability of advice under COFI is not limited to matching products to client needs at a point in time. It is about ensuring fair treatment across the entire client journey.
Conduct begins with culture and governance
A defining feature of COFI is its emphasis on institutional culture and governance. Boards and key persons will be required to take demonstrable responsibility for embedding fairness, integrity, market trust, and transformation within their organisations.
This is a clear departure from tick-box compliance. Culture cannot be documented into existence; it must be lived, measured, and evidenced through behaviour, decision-making, and outcomes.
Governance structures, conflict-of-interest management, remuneration policies, and oversight mechanisms must all support ethical, client-centric conduct. Under COFI, remuneration structures that undermine objectivity or fair outcomes will face increased scrutiny, reinforcing the long-standing professional principle of placing the client’s interests first.
Accountability as a cornerstone of conduct
One of the most significant conduct shifts under COFI is the explicit focus on accountability. Accountability requires more than compliance with rules; it requires ownership of outcomes.
FPI included Accountability as Principle 9 in our Code of Ethics and Practice Standards in 2024 already: Accountability requires transparency, taking ownership and responsibility of one’s actions and the willingness to explain those actions when asked to do so. It also requires a commitment to addressing the consequences of those actions, including making necessary improvements or corrections when required.
Professionals and institutions must be willing to explain decisions, address errors, and make corrections where client outcomes fall short. Transparency, clarity of scope, and honest communication become essential components of conduct regulation.
This aligns closely with global financial planning standards and professional codes of ethics, which emphasise competence, integrity, diligence, fairness, objectivity, and accountability as pillars of professional behaviour.
Proportionality and preparation
A common concern is that COFI will increase compliance burdens and costs, particularly for smaller advice practices. Proportionality is therefore critical. COFI’s implementation must recognise differences in size, complexity, and risk profile across financial institutions.
Preparation should begin now. Practices should map their activities against COFI’s proposed activity-based licensing framework, review governance and oversight arrangements, strengthen documentation, and deepen their integration of TCF outcomes.
Importantly, compliance and practice management should not be viewed as separate disciplines. Under COFI, they are two sides of the same coin. Well-governed, client-centric practices are more likely to be compliant – and more likely to be sustainable.
An opportunity, not a burden
Ultimately, COFI represents an opportunity to move beyond superficial compliance towards meaningful conduct regulation. Consumers stand to benefit from clearer communication, better-designed products, improved advice quality, and fewer barriers when switching providers or lodging complaints.
For the financial planning profession, COFI affirms long-held professional values. It recognises that ethical conduct, competence, and accountability are not optional extras, but essential to trust, credibility, and the long-term health of the financial system.
COFI should therefore be embraced not as another tick-box law, but as a framework that aligns regulation with professional purpose — placing fair client outcomes, ethical culture, and responsible governance at the centre of financial services.