The Conduct of Financial Institutions (COFI) Bill is proposed South African legislation intended to create a single, outcomes-focused framework for regulating how financial institutions treat customers. It could affect AI, fintech and open finance by placing greater emphasis on fair customer outcomes, transparency, accountability, governance and data-led supervision.
What is the COFI Bill?
The COFI Bill is part of South Africa’s Twin Peaks financial-regulation model. It is designed to consolidate fragmented conduct requirements into a more comprehensive law overseen by the Financial Sector Conduct Authority (FSCA).
Instead of prescribing a detailed rule for every product or technology, the proposed framework focuses on the outcomes customers experience.
Has the COFI Bill become law?
No. The COFI Bill remains proposed legislation and must complete the parliamentary process before it can become law. Financial institutions should monitor official National Treasury, FSCA and Parliamentary updates rather than treating proposed timelines as final.
How could COFI affect artificial intelligence?
COFI is intended to be technology-neutral. This means the same conduct principles could apply whether a service is delivered by a person, a conventional digital platform or an AI-supported system.
Organisations using AI may need to demonstrate that automated decisions, recommendations and customer journeys:
- Produce fair customer outcomes
- Are governed and monitored appropriately
- Use reliable, relevant data
- Provide suitable transparency and disclosures
- Do not create avoidable customer harm
- Can be reviewed when outcomes are challenged
What does COFI mean for open finance?
Open finance connects banks, fintech providers and other financial-services participants through APIs, digital platforms and authorised data sharing.
The proposed framework recognises that several organisations may contribute to one customer journey. This makes clear accountability, permission management, data quality and auditable decision-making increasingly important.
Will COFI prevent financial innovation?
The intention is not to prevent innovation. An activity-based and outcomes-focused framework can give organisations more flexibility to develop new products, provided they can show that customers are treated fairly and risks are managed.
This could support areas such as embedded finance, digital distribution, data-driven services and responsible use of AI.
What is data-driven supervision?
Data-driven supervision uses timely and reliable information to identify conduct risks and evaluate customer outcomes. Under the proposed approach, institutions may need stronger capabilities to collect, analyse and report conduct information.
How should financial institutions prepare?
- Map every participant in digital customer journeys.
- Document how AI-supported decisions are made and reviewed.
- Assess the quality and permitted use of customer data.
- Define accountability across internal teams and external providers.
- Monitor customer outcomes, complaints and exceptions.
- Keep evidence showing how fairness is built into products and services.
Frequently asked questions
Who will oversee conduct under COFI?
The FSCA is expected to supervise the conduct framework, while National Treasury is responsible for policy and drafting.
Does COFI apply only to banks?
The proposed approach is activity-based and is intended to cover a broad range of financial institutions, supervised entities and representatives.
Why does data quality matter?
Poor or incomplete data can produce inaccurate decisions, weak monitoring and unfair customer outcomes, particularly when AI and automated processes are involved.
Read the original ITWeb reporting. This article is general information and not legal advice.
