The COFI Bill proposes a single, comprehensive framework for regulating the market conduct of all financial institutions in South Africa, including banks, insurers and retirement funds. Its central aim is to ensure that financial institutions treat customers fairly, operate transparently and are held accountable for their conduct throughout the product lifecycle.

COFI is a cornerstone of South Africa’s ‘Twin Peaks’ model of financial regulation. Under this framework, prudential regulation is overseen by the Prudential Authority (PA), while market conduct regulation falls under the Financial Sector Conduct Authority (FSCA). The COFI Bill equips the FSCA with a unified set of conduct tools that apply consistently across the financial services sector.

Importantly, COFI adopts a principles based, activity based and outcomes focused approach. Rather than relying on prescriptive rules, financial institutions will be expected to demonstrate that their conduct delivers fair outcomes for customers in practice – not merely on paper.

How did we get here?

The move towards COFI began in earnest in 2014, when National Treasury published a discussion paper proposing a new market conduct framework aligned with the Twin Peaks vision.

The first draft of the COFI Bill was released in 2018 and prompted extensive industry. A revised draft followed in 2020, incorporating material changes. Targeted consultations between National Treasury and the FSCA continued through 2021.

On 25 March 2026, Cabinet approved the COFI Bill for submission to Parliament, where it will now proceed through the legislative process, including further opportunities for public participation.

Key implications for pension funds

While the COFI Bill does not repeal the Pension Funds Act 24 of 1956 (PFA), it introduces a new conduct focused regulatory layer that will apply alongside it. Broadly, the PFA will continue to govern the structural and prudential aspects of retirement funds, while conduct related provisions will be consolidated under the COFI framework.

Key changes include the following:

From registration to licensing

Retirement funds will move from a registration based system to a formal conduct licensing regime. All funds will be required to hold a COFI licence issued by the FSCA in order to operate. Existing funds will be afforded a three year transition period from the date of promulgation to obtain the requisite licence.

As part of this shift, the PFA will be renamed the Retirement Funds Act.

Public sector funds regulated

Public sector retirement funds – including those to which the state, provincial entities or municipalities contribute – will be brought squarely within the FSCA’s regulatory ambit. This reform aims to ensure consistent member protection across all retirement funds, regardless of sector.

Stronger governance requirements

The COFI Bill introduces enhanced governance standards for retirement fund boards. Trustees and other key persons will be subject to expanded “fit and proper” requirements, including standards of honesty, integrity, competence and relevant experience. The bill also reinforces democratic governance through member representation and strengthens accountability mechanisms.

Employers as supervised entities

A significant development is the designation of participating employers as “supervised entities” under the COFI Bill. This will enable the FSCA to exercise oversight over employer related conduct, including contribution non payment – a long standing risk to members’ retirement savings.

Enhanced member protection

The Treating Customers Fairly (TCF) principles are embedded at the core of the COFI framework. Where a financial institution provides services to a retirement fund, retail customer protections will extend directly to fund members. The COFI Bill also restricts unreasonable post sale barriers that could impede members from transferring or switching products.

Activity based licensing for administrators

Retirement fund administrators will be required to obtain a COFI licence, replacing the current registration regime under section 13B of the PFA. The COFI Bill distinguishes between third party administration and own fund administration, reflecting COFI’s activity based approach.

What now?

Although the COFI Bill may still be refined as it progresses through Parliament, the direction of reform is clear. Trustees, administrators and employers should begin familiarising themselves with COFI’s core principles of fairness, transparency and accountability, and assessing how these will affect governance arrangements, compliance frameworks and operational practices.

Stakeholders should also consider engaging in the parliamentary process once the bill is formally tabled, to ensure that sector specific concerns are properly addressed.

Written by Imraan Mahomed, Director and Thato Makoaba, Associate in Employment Law at Cliffe Dekker Hofmeyr