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Comment Sought on Second Draft of COFI Bill

September 30, 2020

National Treasury

National treasury seeks comment on the second draft of the Conduct of Financial Institutions (COFI) Bill.

The call for comment was published in Government Gazette 43741.

According to the notice, the first draft of the bill was published for comment in December 2018.

The draft bill aims to provide for a regulatory framework for the conduct of financial institutions that will:

• 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 financial inclusion;
• promote transformation of the financial sector; and
• assist the South African Reserve Bank in maintaining financial stability; and
• provide for matters connected therewith.

Treasury has outlined key changes made between the first and second drafts.

One key change includes the inclusion of proposed consequential amendments to the Financial Sector Regulation (FSR) Act to enable the Financial Sector Conduct Authority (FSCA) to better exercise its powers in conjunction with relevant legislation and other regulators with jurisdiction in the financial sector.

Treasury also points out that enabling provisions for conduct standards that were contained in various chapters of the first draft of the COFI Bill have been removed.

The standard-making provisions in the FSR Act are also proposed to be strengthened through consequential amendments to the act.

Other changes include that the licensing chapter has been significantly refined, transformation in the financial sector is to be strengthened, references to medical schemes and medical scheme administrators have been removed from the revised draft bill and a new license activity of corporate advisory services has been included.

In a statement, treasury confirmed that it plans to finalise the draft bill after taking account of the second-round comments.

The draft bill will then be submitted to cabinet for approval.

The plan is to table the draft bill in parliament early next year.

Treasury describes the draft bill as a “key pillar in government’s Twin Peaks financial sector regulatory reform process that aims to entrench better financial customer outcomes in the South African financial sector”.

Treasury has also released a Response Document that explains the changes made in greater detail and provides an overview of other changes made to the draft bill that aim to ensure technical accuracy of provisions.

Comment is invited until 30 October 2020.