The Conduct of Financial Institutions (COFI) Bill represents the most fundamental restructuring of South Africa's financial regulation since the Twin Peaks model was introduced. It replaces sector-based licensing (separate licences for banking, insurance, securities, payment services) with activity-based licensing — meaning a fintech offering payments, lending, and insurance distribution would need one licence covering all three activities.
What Changes
Under the current regime, a fintech offering payment services, credit, and insurance distribution needs: a PSP registration under the NPS Act, a credit provider licence under the NCA, and an FSP licence under FAIS. Three regulators, three applications, three compliance frameworks. Under COFI, the same fintech would apply for a single "financial institution" licence from the FSCA, specifying the "financial activities" it intends to conduct.
The Transition Challenge
Existing licence holders will need to transition to the new regime within a prescribed period (expected 12-24 months from COFI commencement). The FSCA has indicated that transitional arrangements will be "as seamless as possible," but the reality is that every financial institution in South Africa — from the Big 5 banks to the smallest fintech — will need to review its licensing architecture and potentially re-apply under the new framework.