It has recently been revealed that the Conduct of Financial Institutions Bill is in the final stages of preparation at the State Law Advisors for submission to Parliament.

The COFI Act was meant to be the second peak of the twin peaks which should have been bathing in the sunlight together with the Insurance Act from 1 July 2018. The first defective draft of the Act appeared in public in 2020. That version was abandoned and a new version was circulated to a limited number of persons in late 2021.

The previous FSCA 3-year plan had an explicit programme for transparent consultation in relation to the scope and the contents of the Bill stretching over a number of years into about 2026. All that disappeared from the latest FSCA 3-year plan. It is apparent from that document that the matter was taken over by the Prudential Authority. The FSCA were unable to give any guidance as to what stage the process had reached.

Despite the fact that we are constitutional democracy carefully guarded by the Constitutional Court as to the need for public consultation in regard to such laws, there has been no public consultation in regard to the scope or content of the latest version. Presumably the Prudential Authority and the State Law Advisors are leaving that to the parliamentary process. In view of the fact that the Authorities are in close touch with the financial institutions most affected by the law and are the guardians of the interests of the public, this is a process that should not be left to Parliament. Once a bill is drafted and submitted to Parliament, it is difficult to persuade anyone to make any changes. The National Health Insurance Act is a typical example.

Financial laws which are drafted without full consultation are less likely to serve our best interests regarding the ability of financial institutions such as insurers and intermediaries to provide financial products and financial services that serve the interests of the economy and the public.

Presumably the COFI Act will be brought into day-to-day operation through conduct standards. At least in relation to those conduct standards there is a required consultation process, but that will not cure anything which is inappropriate to good insurance in the COFI Act itself.

The COFI Bill remains in shadows. We will all have to wait to see what the State Law Advisors, presumably in consultation with the Authorities to some extent, put before Parliament. Before anything becomes working law we are likely to get a lot of information on electronic and printed pages. My advice is to start mastering generative AI because you are going to need help in analysing what is there and what has changed.

Patrick Bracher
Norton Rose Fulbright South Africa
January 2025