The first draft of the Bill was published for comment in December 2018.
The second draft of the Bill is accompanied by a Response Document, which explains key changes made to the first draft of the Bill, in response to comments submitted and engagements held.
In a statement, Treasury said it aims to finalise the Bill after taking into account the second-round comments. The Bill will then be sent to Cabinet for approval and tabling early next year.
“The Cofi Bill is a key pillar in government’s Twin Peaks financial sector regulatory reform process, which aims to entrench better financial customer outcomes in the South African financial sector. It is a financial institution-facing law that sets requirements for financial institutions to meet and outcomes to deliver.”
The Bill aims to significantly streamline the legal landscape for conduct regulation in the financial services sector and to give legislative effect to the market conduct policy approach, including implementation of the Treating Customers Fairly (TCF) principles.
“These principles are currently not enforceable, and while customer outcomes may have somewhat improved, this has not been consistent across the sector. The Cofi Bill will ensure that the TCF principles are legally binding and enforced on all financial institutions,” said Treasury in a statement.
Key changes made between the first and second drafts of the Cofi Bill include the application of the Cofi Bill in relation to existing legislation.
In this regard, in response to comments and engagements that flagged potential inconsistencies and ambiguities with existing laws, the revised Cofi Bill has proposed consequential amendments to the Financial Sector Regulation (FSR) Act.
The draft also proposes an approach to conduct standards.
“The first draft of the Cofi Bill contained enabling provisions for making conduct standards in different chapters. These have been removed, and the standard-making provisions in the FSR Act have instead been strengthened.
"The FSCA will thus be empowered, through the conduct standard making provisions in the FSR Act, to set conduct standards under the Cofi Act,” said Treasury.
Another key change will be the refined approach to licensing.
“Key enabling provisions have been proposed for inclusion in the FSR Act licensing chapter through consequential amendments. Provisions have been expanded and strengthened to provide for a more comprehensive licensing framework for the Twin Peaks regulatory authorities.
“The intended effect of this approach is that an entity will require a licence issued under the Cofi Act, but the provisions that set out the framework for licensing are those in the FSR Act,” said Treasury.
The Response Document accompanying the revised draft of the Cofi Bill explains the changes made in greater detail, and provides an overview of other changes made to the Bill that aim to ensure technical accuracy of provisions.
Comments on the Bill will be accepted until 30 October 2020. Comments can be sent to az.vog.yrusaert@tcudnoctekram.
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