COFI and golf: navigating the course of regulatory change

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For financial advisers in South Africa, adapting to the Conduct of Financial Institutions (COFI) Bill is much like playing a round of golf. Success requires careful planning, precision, and the ability to adjust your approach based on the challenges ahead. Just as you wouldn’t confidently step onto the first tee without knowing the game, you shouldn’t navigate COFI without preparation.

Understanding how COFI reshapes financial regulation, and how to stay compliant throughout the process, will be key to ensuring a smooth transition. Let’s break down COFI’s impact using the lessons from the fairways and greens.

First hole: know the course – understanding COFI’s scope

Before taking your first swing in golf, you study the course – its layout, hazards, and wind conditions. In the same way, advisers need to understand the landscape of COFI. Unlike FAIS, which focused specifically on financial service providers (FSPs), COFI introduces a single, overarching regulatory framework for all financial institutions.

This means that advisers, insurers, asset managers, and banks will all be playing by the same market conduct principles and rules. The shift toward a more principles-based approach puts greater emphasis on delivering fair client outcomes rather than simply following prescriptive rules.

Second hole: tee off with a strong compliance strategy

Your opening shot sets the tone for the rest of the round. A solid compliance framework is your driver – it positions your business for success under COFI. The new regulatory framework requires financial advisers to:

• Implement a client-centric approach that prioritises fair outcomes.
• Demonstrate compliance not just on paper but in actual practice.
• Strengthen governance and accountability structures within their firms.

This is not a simple rulebook check; it’s about integrating compliance into the fabric of your business.

Navigating the fairway: adapting to regulatory hazards

Even with a strong start, every round of golf presents challenges – bunkers, water hazards, and unpredictable winds. COFI introduces its own set of “hazards” that advisers must be ready to navigate, including:

• More accountability: COFI shifts more responsibility onto financial services providers to proactively manage risks and demonstrate ethical business practices.
• Increased regulatory scrutiny: The Financial Sector Conduct Authority (FSCA) will focus more on how advisers ensure positive client outcomes.
• Higher compliance standards: Advisers will need to adapt their business models to meet evolving governance and reporting requirements.

As with golf, strategic course management is essential. By staying informed, maintaining strong compliance policies, and embracing a proactive mindset, advisers can avoid costly mistakes.

Refining your swing: continuous improvement under COFI

No golfer succeeds without refining their technique. Similarly, financial advisers need to continuously assess and improve their compliance frameworks under COFI. Here’s how:

• Ongoing training: Ensure you and your team are up to date with COFI’s requirements.
• Client engagement: Transparency and clear communication with clients will be critical to demonstrating compliance.
• Technology and systems: Invest in compliance tools and reporting mechanisms to streamline processes and ensure efficiency.

The final hole: completing the round with confidence

As you approach the final holes, consistency is key. The transition to COFI is not just about passing regulatory checkmarks – it’s about embedding good conduct into your practice to deliver long-term success.

Financial advisers who are supported by a network that embraces COFI as an opportunity to enhance their client relationships and refine their business strategies will find themselves well-positioned for the future. At Graviton, we ensure that we partner with industry experts to guide our advisors on the correct path.

So, as you stand on the first tee of COFI’s regulatory course, ask yourself: Do you have the right strategy to play through and win?