Regulatory update - COFI Bill remains a mystery

The most significant legislation for the financial services industry (including non-life insurers) is the conduct of financial institutions legislation which was to have been introduced as the second peak of the Twin Peaks when the Financial Sector Regulation Act and the Insurance Act came into force in 2018.

Until a couple of years ago, there was an unstable timeline regularly issued by the Financial Sector Conduct Authority in regard to progress with the legislation. Then, despite the FSCA being the conduct authority, the drafting of the conduct legislation was taken over by the Prudential Authority.

We all scour every report and strategy document looking for clues as to where we are. The latest document to hit our screens was the 2025 FSCA 3-Year regulation plan for the period from 1 April 2025 to 31 March 2028. Despite 44 references to the COFI Bill, the timeline remains unknown. The FSCA has indicated that "communications surrounding implementation of this project and the COFI Bill readiness will, in due course, be communicated publicly. Should there be delays in finalising the COFI Bill, it is likely that the FSCA will start to introduce the themed framework through a staggered approach¢â‚¬.

The 3-Year plan includes a Holistic Timeline for Regulatory Interventions stretching till March 2028. What we are told regarding the COFI Bill is that "Timelines for completion outside the control of the FSCA. Support will continue as long as necessary¢â‚¬. For the next three years, the regulatory framework under the COFI Bill will in the first year begin targeted consultation on themed frameworks and in the following two years there will be targeted and public consultation on the themed frameworks. What themes are envisaged is not revealed. For the rest, the FSCA pledges the "Continuation of other technical work¢â‚¬.

The themes are formidable. The COFI Bill, in the insurance context, has to create a new COFI Act supported by a multiplicity of standards dealing with everything that is currently in the Short-term Insurance Act together with its Regulations and Policyholder Protection Rules, similar provisions in the Long-term Insurance Act, and the FAIS Act with its mountain of subsidiary laws. In parallel, the Financial Markets Act is being looked at together with the Collective Investments Schemes Act and the Credit Rating Services Act and a number of other pieces of financially-related legislation. It is a monumental undertaking. It would help if the PA would give financial institutions an indication of what they are doing and what their timeline is for publishing the first draft of what they have called an outcomes-based law. Previous versions have changed the entire licensing process which means, besides coping with new legislation, financial institutions like non-life insurers and brokers will have to start again with licensing their specific activities.

The good news is that while the years tick away, we can all deal with matters in terms of the many existing laws where the contents are, at least, familiar to us. Perhaps by the time it all becomes law, generative AI will be able to cope with most of it.

Patrick Bracher
Norton Rose Fulbright South Africa
July 2025