The Conduct of Financial Institutions (COFI) Bill is umbrella legislation designed to consolidate market conduct provisions from more than a dozen existing financial sector laws, including the Financial Advisory and Intermediary Services (FAIS) Act, the Collective Investment Schemes Control Act (CISCA), the Long and Short-Term Insurance Acts, and others, into a single, comprehensive market conduct framework.
Its key objectives are to:
- protect financial customers, including by promoting the fair treatment and protection of financial customers by financial institutions.
- support fair, transparent and efficient financial markets.
- promote trust and confidence in the financial sector.
- support innovation and the development of and investment in sustainable innovative technologies, processes and practices.
- support sustainable competition in the provision of financial products and financial services.
- promote transformation of the financial sector.
Why Was COFI created?
COFI stems from regulatory weaknesses exposed globally during the 2008 financial crisis and locally within South Africa’s fragmented conduct legislation. The Twin Peaks regulatory model (implemented through the Financial Sector Regulation (FSR) Act in 2017) revealed gaps, overlaps, and inconsistencies in how financial institutions were supervised. COFI was therefore created to harmonise market conduct regulation, across the financial sector.
Key shifts COFI introduces
COFI introduces several systemic changes such as moving away from the FAIS productcategory licensing model toward activitybased licensing. Financial institutions will now be authorised according to the specific activities they perform (e.g., giving advice, administering investments, and investment management), rather than the type of product they sell.
COFI also embeds:
- Principles-based regulation, requiring firms to demonstrate commitment to fair outcomes rather than compliance box-ticking.
- Outcomes-focused supervision, where regulators evaluate whether clients receive good outcomes.
- Promote ethical and a Treating Customers Fairly (TCF) culture in financial service providers (FSPs)
- Enhanced product governance, placing obligations on product providers and intermediaries to ensure suitability, target market clarity, and prevention of customer harm.
- Risk-based oversight, allowing the Financial Sector Conduct Authority (FSCA) to focus more attention on businesses and activities that pose greater risk.
How will COFI impact your investment advice?
For financial advisors in South Africa, COFI represents a strategic reset. All FSPs will be relicensed under the new framework, and practices must map their service offerings to the new activity categories. All FSPs will be expected to:
- Demonstrate a clear understanding of the target market for products recommended.
- Provide evidence how advice aligns with investment process and intended customer outcomes.
- Strengthen processes for identifying and mitigating conflicts of interest.
- Embed an ethical and TCF culture in their FSP,
- Establish and maintain governance structures that can demonstrate fair client outcomes in every interaction.
Why Equilibrium is the DFM built to solve for COFI
Independent research indicates that three of the biggest challenges that advisers currently face is compliance, the lack of capacity to meet all their commitments, and keeping pace with technology. Equilibrium, with an investment philosophy of outcome-based investing, isuniquely positioned to support advisers to overcome some of these challenges as they transition into the COFI regime with. Because COFI demands stronger product governance, clearer suitability frameworks, and documented advice rationale, Equilibrium can provide:
- Additional capacity
Equilibrium will be adding capacity for advisers, because they do not have to spend time on conducting investment analysis, fund due diligences, and reporting responsibilities. - Robust, evidence-based portfolio construction
By ensuring portfolios have clear objectives, risk profiles, and client suitability criteria, Equilibrium help advisers meet COFI’s enhanced productdesign and distribution obligations. - Consistency and governance
Equilibrium implements repeatable investment processes, oversight structures, and compliance frameworks that mirror COFI’s expectations for transparency, fairness, and demonstrable client outcomes. - Reduced conflict of interest risk
By centralizing investment decisions within a governed structure, Equilibrium will reduce conflicts that may arise from individual adviser selections, supporting COFI’s emphasis on ethical, clientcentric conduct. - Documentation and reporting that meets COFI standards
Equilibrium will supply outcomefocused reporting, productgovernance documentation, and decisionmaking trails that advisers can rely on during FSCA reviews. - Support transitioning to activitybased licensing
As COFI reshapes licensing, Equilibrium will help advisers clarify their role, value proposition, and service activities, ensuring alignment with the new licensing categories and regulatory expectations.
Through our strategic partnership, Equilibrium brings the power of balance to your financial advice practice, enhancing operational efficiency. For more information, please email info@eqinvest.co.za or visit our website at eqinvest.co.za.
Equilibrium Investment Management (Pty) Ltd (Equilibrium) (Reg. No. 2007/018275/07) is an authorised financial services provider (FSP32726) and part of Momentum Group Limited, rated B-BBEE level 1. Momentum Global Investment Management Limited is an authorised financial services provider (FSP13494) and is exempt from the requirements of section 7(1) of the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS) in South Africa, in terms of the FSCA FAIS Notice 9 of 2025 (published 9 January 2025). EQ-68161-AZ-97-CL.
