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Dawn Of A New Era

ARTICLE BY

  • David Kop
  • Co-founder
  • FI Consult

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As South Africa’s financial planning and advice profession moves toward 2026, a new era of regulation and oversight is taking shape.The Conduct of Financial Institutions (COFI) Bill is expected to become law (in early 2026), the FSCA’s new three-year strategy will be in full effect, and the compliance landscape will look and feel very different from the world of FAIS. For financial institutions, this means both opportunity and obligation: an opportunity to elevate professional standards and client trust, and an obligation to align business models, culture, and operations with a much stricter regulatory regime.

Below are the key developments and themes shaping 2026 and what you need to prepare for.

The COFI Bill: a new regulatory foundation

The COFI Bill represents one of the most significant regulatory shifts since FAIS was introduced two decades ago. Its purpose is to simplify, modernise, and consolidate conduct-related laws under one overarching framework. Instead of being regulated by product category, as is currently the case under FAIS, financial institutions will move to activity-based licensing.

That means a licence will be granted for the activity of providing advice, rather than for selling specific products. This shift better reflects the professional role of a financial planner and separates the act of giving advice from product distribution.

Firms should already be mapping their current services to COFI’s schedule of licensed activities to identify overlaps, gaps, and areas that may require re-licensing. Every Financial Services Provider (FSP) will need to apply for a new licence under COFI, which makes 2026 a critical transition period.

Beyond licensing, COFI introduces enhanced standards for advertising, disclosure, and communication. All client-facing information must be accurate, balanced, and written in plain language. Marketing that exaggerates benefits or hides fees will no longer be tolerated.

Perhaps most importantly, COFI expands the focus from pre-sale advice to the entire client relationship, including post-sale service levels, complaints management, and redress. Advice businesses will be judged not only on how they onboard clients, but on how they treat them throughout the client lifecycle.

While the major impact of COFI will only be understood once the conduct standards are made public, it is important to understand the principles behind COFI and start preparing early for the regulatory change.

The FSCA’s three-year regulatory strategy (2025–2028)

The Financial Sector Conduct Authority (FSCA) has published its regulatory roadmap for 2025–2028. The strategy outlines key priorities that will guide supervision and enforcement over the next three years.

Expect a strong emphasis on:

  • Integrated regulatory solutions – bringing consistency across sectors.
  • Supervisory technology (SupTech) – using data analytics to detect misconduct early.
  • Harmonised risk assessment – applying the same risk lens to advice firms, insurers, and investment providers.

In practice, this means regulators will have a more holistic, technology-enabled view of your business. Firms that embrace digital compliance and internal reporting will find it easier to meet these expectations.

The FSCA Omni-Risk Returns

A key part of this new risk-based supervision model is the introduction of the Omni-Risk Return framework. This reporting tool is designed to give the FSCA a consistent, data-driven picture of each FSP’s conduct, risks, and outcomes.

For financial planning firms, this means submitting structured information about governance, client treatment, product oversight, and operational risks regularly. The Omni-Risk Return is currently in the consultation phase, with a pilot expected in mid-2026, and is scheduled to go live in September 2026.

The data gathered through these returns will help the FSCA identify potential risks early – for example, patterns of client complaints, lapses in disclosure, or weaknesses in governance.

In practical terms, financial institutions (including financial planning businesses) will need to:

  • Strengthen internal reporting systems to capture accurate, timely data.
  • Align operational and compliance functions to produce consistent information.
  • Use Omni data internally, not just for compliance, but as a management tool to monitor risk and performance.

The message is clear: compliance reporting is no longer a back-office exercise. It is part of how the FSCA evaluates your firm’s culture, governance, and client outcomes.

Cybersecurity and data resilience

Cybersecurity is no longer an IT issue – it’s a compliance one. The Joint Standard 2 of 2024 sets out minimum cybersecurity and resilience requirements for financial institutions. While not all financial institutions are required to comply with the code, it is good practice to try to align as far as possible.

Financial institutions must demonstrate they can identify, manage, and recover from cyber incidents. Expect regulators to scrutinise how client data is stored, how threats are monitored, and how incidents are reported.

As the risk of cyber attacks grows, financial institutions will need to pay closer attention to their cybersecurity.

Fit and proper: raising the professional bar

It is expected that COFI will also introduce enhanced fit and proper standards – not only for representatives and key individuals, but also for key persons and financial institutions themselves. Expect more stringent requirements around competence, qualifications, ethics, and integrity.

This may include more rigorous credit and criminal background checks, formal competency mapping, and continuing professional development (CPD) linked directly to your licensed activities.

For planners, this reinforces the shift toward professionalisation and  positioning financial advice as a trusted, skilled service rather than a sales channel.

Disclosure, remuneration and conflicts of interest

Transparency is another pillar of COFI. Advisers will be required to give full disclosure of all fees, commissions, and third-party relationships. Clients should be able to understand, in plain language, what they are paying, why, and how conflicts are managed.

Advertising must be fair and not misleading, and remuneration structures will come under greater scrutiny. The FSCA has made it clear that conflicts between advice and product sales must be managed – or eliminated. Firms that still rely heavily on commission income will need to justify those models with clear value delivery and disclosure.

While all of this exists under FAIS, we will move from disclosure to demonstrating that the client understood the disclosure.

Complaints management and client redress

The new regime demands more than just logging complaints; it expects a culture of learning from them. Firms will need robust frameworks to identify root causes, implement corrective actions, and ensure fair, timely resolution.

Financial Institutions will need to have service-level standards for handling complaints, and businesses that treat redress as a compliance exercise rather than a client-centric responsibility will attract attention.

Governance, risk and internal controls

Expect stronger expectations around governance, oversight, and internal control. Every licensed financial institution will need evidence of board or senior-level supervision, internal audit processes, and risk management frameworks that cover financial, operational, reputational, and cyber risks.

For smaller FSPs, this may sound daunting, but proportionate application is built into COFI. The principle is that governance should be appropriate to the size and complexity of the business, but it still needs to be formalised and documented.

Enforcement, penalties and public accountability

The FSCA has promised more visible enforcement in the coming years. Expect more public warnings, published penalties, and licence suspensions or withdrawals for non-compliance.

This shift toward transparency means enforcement will be as much about deterrence as punishment. Reputational risk is real and no firm can afford to appear on the wrong side of a regulatory notice.

Transformation, inclusion and social impact

Finally, the FSCA has reaffirmed its commitment to transformation, financial inclusion, and fair treatment. Under COFI, regulated entities must demonstrate how their practices promote access, diversity, and inclusion in the financial system.

In 2026, financial institutions face a pivotal year. The regulatory framework is shifting from rules-based compliance to principles-based professionalism. COFI is not just about new paperwork; it’s about redefining how the industry behaves, communicates, and serves clients.

The best-prepared firms will be those that start early: mapping activities, updating governance, strengthening cyber defences, training their teams, and embedding a culture of transparency and client-centric conduct. Seek support to prepare for your COFI readiness, if required.

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