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The Conduct of Financial Institutions (COFI) Bill is predicted to redefine the compliance landscape for financial advisers in South Africa. One of the most significant shifts is the move from a rules-based to a principles-based regulatory approach. Instead of rigid, prescriptive requirements, advisers must now demonstrate that they are actively delivering fair client outcomes.

From rules to principles: what’s changing?

Traditionally, compliance in the financial sector followed a rules-based model. Specific regulations dictated exactly what advisers could and couldn’t do, often leading to a “tick-box” approach. Under COFI, the principles-based framework requires advisers to focus on the intent behind the regulation rather than just meeting minimum standards.

This shift means:

  • Less focus on prescriptive rules, and more emphasis on ethical and suitable judgment
  • Greater accountability for ensuring positive client experiences
  • Increased regulatory scrutiny on how advisers apply these principles in practice

What this means for financial advisers

For advisers, adapting to a principles-based regulatory environment means:

  • A stronger ethical foundation – Compliance is no longer just about avoiding penalties; it’s about embedding competence, integrity, fairness, transparency, and professionalism into every client interaction.
  • More flexibility, but also more responsibility – Advisers must justify their decisions based on client outcomes rather than relying on predefined checklists.
  • Regulatory expectations will be higher – The FSCA will assess compliance based on whether advisers can prove they are acting in the best interests of their clients, not just following a set of rules.

How to adjust your approach

To thrive in this new landscape, financial advisers should:

  • Reassess client engagement strategies to ensure it is effective, efficient, advice is tailored, clear, and genuinely beneficial
  • Develop a compliance culture within their practice that prioritises fairness over mere adherence to rules
  • Stay ahead of regulatory expectations by continuously refining processes to align with COFI’s overarching principles
  • Partner with well-positioned independent financial adviser networks and gain access to their structures and governance capabilities.

The bottom line

COFI’s shift to principles-based regulation places a greater emphasis on ethics, suitability, transparency, and trust in the financial advice industry. Rather than merely ticking compliance boxes, advisers must now focus on demonstrating the value and fairness of their services.

Are you prepared for the shift? Now is the time to align your practice with COFI’s principles and ensure you’re ready for a more client-centric regulatory environment, reaping the benefits and the value of guidance from partnering with independent financial adviser networks.

 

 

 

Graviton Financial Partners (Pty) Ltd is an authorised financial services providers in terms of the Financial Advisory and Intermediary Services Act,2002. The information in this article does not constitute financial advice While every effort has been made to ensure the reasonableness and accuracy of the information  contained in this article (“the information”), the FSP, their shareholders, subsidiaries, clients, agents, officers and employees do not make any  representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability  for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance  upon the information.