From CompliNEWS | Financial Service Intelligence Watch

COFI moves forward: Shift to single conduct framework gains momentum
By Compli-Serve

After years of discussion and delay, the Conduct of Financial Institutions (COFI) Bill has taken a decisive step forward, with Cabinet approving it for submission to Parliament. For an industry that has been preparing for this shift since 2018, the message is now clear: COFI is no longer theoretical. It is moving into implementation territory.

At its core, COFI is about consolidation. The Bill is designed to replace the fragmented conduct framework that currently governs financial institutions with a single, consistent regime. Instead of navigating multiple pieces of legislation and overlapping requirements, firms will be expected to operate within a unified conduct standard that applies across the sector.

But this is not simply a clean-up exercise. It represents a fundamental shift in regulatory philosophy. COFI moves away from rule-based compliance toward an outcomes-based approach, where the focus is on whether firms are delivering fair, consistent outcomes for customers. That brings conduct risk firmly into the centre of the business, not just as a compliance function, but as a governance responsibility.

This has direct implications at board and executive level. Under COFI, accountability will sit far more clearly with senior management. Governance frameworks, decision-making processes, product design, distribution practices, and customer communication will all need to stand up to scrutiny. It will no longer be sufficient to demonstrate technical compliance. Firms will need to show that their business models produce fair outcomes in practice.

Another important shift is the emphasis on consistency. COFI is intended to level the playing field across different types of financial institutions, ensuring that similar activities are regulated in a similar way. This removes the regulatory arbitrage that has existed in parts of the market and introduces a more uniform standard of conduct.

For many firms, the groundwork has already begun. Concepts such as Treating Customers Fairly, conduct risk frameworks, and enhanced reporting have been in place for some time. But COFI formalises these expectations and raises the bar. What was previously guidance or supervisory expectation will become enforceable obligation.

It is also worth noting what COFI is not. It is not an overnight change, and it is not yet law. The Bill still needs to pass through the legislative process. But the regulatory direction is settled, and supervisors are already applying COFI-aligned thinking in their engagement with firms.

The practical takeaway is straightforward. Firms should not wait for enactment before acting. Now is the time to review governance structures, test conduct risk frameworks, assess product oversight processes, and ensure that customer outcomes can be evidenced, not assumed.

COFI has been a long time coming. It is now firmly on its way.