South Africa Plans to Revolutionize Its Fintech Industry With Ambitious New Regulations
The South African government has unveiled plans to introduce the Conduct of Financial Institutions (COFI) Bill, as it aims to reform and strengthen the regulation of the financial services sector.
The proposed Bill is poised to transform the South African finance sector, industry players reckon, promising increased competition and innovation, particularly within the fintech space.
Designed to consolidate and streamline financial legislation, COFI will affect all financial institutions, from banks and insurers to credit providers, advisors, and even non-financial entities like telcos and retailers.
Speaking on the rollout of the COFI bill, Group MD at Network International Mpho Sadiki, highlighted the industry’s eagerness to enact the bill.
He said,
“A lot of work and consultation has gone into this legislation. In essence, it gives regulators the scope to govern institutions based on their activity.” He further explains that COFI will shift from the current sectoral approach to an activity-based one, ensuring uniform regulation for similar activities across different institution types.
“Despite some resistance to additional regulatory burdens, COFI will create a level playing field. COFI is a big deal because it removes the limitations of who can provide services, opening up participation and injecting much-needed competition and innovation into the industry”, he added.
Sadiki further noted that South Africa has a mature and excellently regulated financial services sector, therefore COFI stands to offer the industry far more opportunities than whatever inconveniences may come with revised or new regulations.
The draft Conduct of Financial Institutions Bill (COFI) was released for public comment in 2018. COFI was drafted in conjunction with the Financial Sector Regulators Act of 2017 (FSR Act) as part of an extensive reform of the South African financial services legal framework.
On September 28, 2020, South Africa’s national treasury released the second draft of the COFI bill to regulate the conduct of financial institutions.
The COFI bill establishes a standard of ethical and transparent behavior for all financial institutions, regardless of their specific services or products. The bill prioritizes fair treatment of customers by implementing stricter conduct standards and empowering them to hold financial institutions accountable.
Also, COFI mandates robust systems and processes for compliance with conduct standards, promoting a culture of ethical conduct within institutions.
Overall, the implementation of the COFI Bill, represents a major shift in the South African financial landscape, aiming to create a more fair, transparent, and customer-centric market environment.
