Why the CoFI Bill Matters Now
South Africa's financial sector is heading into one of its biggest regulatory overhauls in decades. The Conduct of Financial Institutions Bill (CoFI) is a fundamental reset of how financial institutions are expected to behave, govern themselves, and treat customers.
The CoFI Bill South Africa forms a key component of the country's Twin Peaks regulatory reform and will primarily focus on strengthening market conduct regulation across the entire financial services sector.
Following two rounds of public commentary, CoFI is expected to be tabled in Parliament in the first quarter of 2026. Promulgation is anticipated in 2026, with a transitional period of approximately three years to follow.
That transition period sounds generous, but it is not. The institutions that start preparing now will have a measurable compliance advantage over those that wait for the final text.
What Is the CoFI Bill?
The Conduct of Financial Institutions Bill (CoFI) is a landmark piece of legislation designed to unify South Africa's fragmented financial sector laws under a single, principles-based conduct framework.
South Africa currently regulates financial conduct through a patchwork of sector-specific laws. The CoFI Bill changes that. It will consolidate and replace various industry-specific conduct laws, including the Financial Advisory and Intermediary Services Act, the Collective Investment Schemes Control Act, the Short-term Insurance Act, the Long-term Insurance Act, the Credit Rating Services Act, the Financial Institutions (Protection of Funds) Act, and the Friendly Societies Act.
It also brings a significant shift in regulatory philosophy. Rather than prescribing exact rules for every scenario, the CoFI Bill South Africa moves toward conduct-based regulation. Institutions are expected to demonstrate that their decisions, products, and processes consistently deliver fair outcomes for customers.
The Financial Sector Conduct Authority (FSCA) is the primary regulator responsible for implementing and supervising compliance with CoFI. The FSCA Commissioner has emphasised that readiness for CoFI is an industry-wide responsibility, not solely the FSCA's. Financial institutions must proactively align their business models, governance frameworks, and compliance strategies with CoFI's principles and expectations.
In short: the FSCA will not carry institutions across the line. That work belongs to each institution.
Key Objectives of the CoFI Bill
Understanding what the CoFI Bill is trying to achieve helps institutions prioritise where to focus first. The Bill is built around four core objectives:
Fair customer outcomes. Every product, service, and interaction must be designed and delivered with the customer's best interest as the measurable standard. This is not aspirational language. It will be assessed and enforced.
Market integrity and transparency. The CoFI Bill South Africa requires institutions to be honest and clear in how they communicate, price products, and disclose risks. Opacity is no longer a defensible position.
Strengthened consumer protection. The Bill reflects a deep understanding of both consumer protection and market realities. The FSCA has been deliberate in recognising the strain that constant regulatory changes place on institutions. CoFI is designed to give a single, flexible framework that aligns with international best practice and responds to modern risks.
Risk-based supervision. The FSCA will not apply the same level of scrutiny to every institution equally. Higher-risk institutions and products will attract more intensive oversight. This makes internal risk controls and conduct monitoring critical infrastructure, not optional extras.
As Lizl Budhram, Head of Advice at Old Mutual Personal Finance, put it, "South Africa's regulatory framework has reached a point of maturity. It's time to consolidate, simplify, and lead with purpose. CoFI gives us the clarity, cohesion, and confidence to do just that.”
What the CoFI Bill Means for Banks in South Africa
This is where the CoFI Bill South Africa becomes most relevant for banks and financial institutions operating day to day.
- Increased accountability for conduct
Under the Conduct of Financial Institutions Bill (CoFI), banks cannot delegate accountability for poor customer outcomes to product complexity or market conditions. Boards and senior management will be expected to demonstrate active oversight of conduct risk, not just sign off on compliance policies.
Stronger governance and internal controls
Institutions will need to ensure that key persons and representatives satisfy fit and proper requirements, maintain sound corporate governance standards, and implement appropriate remuneration and conflict of interest policies. Governance gaps that regulators previously tolerated will receive direct scrutiny under CoFI.
Product design and customer fairness
Banks will need to demonstrate that financial products are designed for the customers they are sold to, not just technically compliant. This includes reviewing existing product lines to assess whether they genuinely serve customer needs at every stage of the product lifecycle.
Enhanced disclosure and reporting obligations
Financial institutions must meet all reporting, record-keeping, and audit requirements under CoFI at all times. This means updating disclosure frameworks so that customers receive clear, relevant, and timely information before making any financial decision.
Alignment with Treating Customers Fairly (TCF)
The CoFI Bill formally embeds the TCF framework into law. What was previously a principles-based expectation becomes a legal obligation. Fair customer treatment practices must be strengthened in line with the Treating Customers Fairly (TCF) principles across every customer-facing function in the institution.
Compliance Requirements and Operational Impact of the CoFI Bill
Knowing what CoFI requires is one thing. Building the operational capacity to meet those requirements consistently is another. Here is what banks need to put in place:
Updated compliance frameworks
Existing frameworks built around the old sector-specific laws will need to be reviewed and restructured. Financial institutions are advised to begin mapping their current activities to prepare for the activity-based licensing model and to develop compliance frameworks aligned with this approach. This is not a minor update. It is a structural redesign.
Risk and conduct monitoring
CoFI's risk-based supervision model means institutions need live visibility into conduct risk across all business lines. This requires moving beyond periodic reviews toward continuous monitoring of how products are sold, how complaints are handled, and how customer outcomes are tracked.
Data and reporting requirements
The CoFI Bill South Africa demands accurate, timely, and structured data. Reporting frameworks may need to be updated, while transformation policies and related structures should be developed or enhanced. Institutions relying on manual reporting processes will struggle to meet these requirements at scale.
Staff training and internal policies
Conduct-based regulation requires staff at every level to understand not just the rules, but the intent behind them. Training programmes need to move beyond tick-box completion toward embedding conduct principles into day-to-day decision-making.
Integration with AML and KYC processes
The CoFI Bill does not operate in isolation. Its customer fairness and due diligence obligations intersect directly with existing AML, KYC, and FICA requirements. Institutions that treat these as separate workstreams will create compliance gaps. The smarter approach is integration: a single customer view that supports both conduct and financial crime obligations simultaneously.
How Banks in South Africa Can Prepare for the CoFI Bill
The three-year transitional period following promulgation is not a grace period. It is the window institutions have to demonstrate that they are genuinely building toward compliance, not scrambling at the deadline.
Here are the practical steps banks should be taking now:
Conduct a gap assessment
Map current governance structures, product lines, disclosure practices, and compliance frameworks against CoFI Bill South Africa requirements. Identify where the gaps are before the regulator does.
Upgrade compliance systems
Automated and technology-driven systems and processes should be reviewed to confirm that they remain fit for purpose under the new regulatory expectations. Systems designed for the old regulatory environment may not meet CoFI's conduct monitoring, reporting, and audit trail requirements.
Automate monitoring and reporting
Manual processes cannot scale to meet the continuous monitoring expectations of the CoFI Bill. Automated compliance tools that track conduct indicators, flag anomalies, and generate structured reports give institutions the visibility and speed regulators will expect.
Strengthen customer due diligence
CoFI's customer fairness obligations require institutions to genuinely know their customers, not just verify their identities. Enhanced CDD processes that capture customer needs, risk profiles, and product suitability assessments will become baseline expectations, not differentiators.
Use RegTech solutions
Early preparation will ensure agility and competitiveness once the new regime takes effect. RegTech platforms that integrate conduct monitoring, KYC, AML, and reporting into a single operational layer give banks the infrastructure to meet CoFI Bill South Africa requirements without building parallel compliance systems from scratch.
Youverify's compliance platform supports banks in building exactly this kind of integrated infrastructure, combining automated identity verification, transaction monitoring, customer risk profiling, and audit-ready reporting in one place. As CoFI's obligations take effect, that connected approach will matter more than any individual compliance tool.
The Time to Act Is Before the Law Is Final
For banks in South Africa, the question is not whether to comply. It is how quickly and how deeply the groundwork can be laid before the final requirements are locked in.
The CoFI Bill South Africa rewards proactive institutions. It will penalise those that wait.