Page 87 - Profile's Unit Trusts & Collective Investments - September 2025

Legislation and guidelines Chapter 5

R requirements relating to the identification, avoidance and management of conflicts of interest
including the adoption of a conflicts of interest management policy;
R requirements relating to how portfolios are designed, developed and distributed including
approval, monitoring, review and reporting of portfolios;
R requirements for a manager’s prospectus and what it must contain;
R requirements relating to the appointment of a trustee, fiduciary or custodian;
R requirements relating to the execution of trades and related transactions.
Principles-based
The draft legislation specifies standards related to the intention of the regulation rather than lists of
compliance rules. The intention is to enable the regulator to focus on the spirit rather than the letter
of the law (ie, to monitor and enforce outcomes rather than procedures).

Outcomes-focused
The outcomes-based method to be implemented under the COFI Bill will mean that FSPs will not
just be measured on rules and compliance, but also on their ability to achieve good client outcomes.
This will include methods of assessing whether costs and charges are fair and justifiable.
Risk-based and proportionate
The COFI Bill pursues a risk-based approach to monitoring outcomes which will enable the
regulator to identify areas of greatest risk and address such risks in a proportional manner. The
objective is to create a fairer environment for institutions of differing sizes and encourage new
entrants into the market by reducing barriers to entry.
Transformation
The COFI Bill explicitly supports transformation, making the FSCA responsible for supporting
black-owned businesses that wish to provide financial products and services. The provisions of the
Bill also strengthen protection of vulnerable consumers.
Under the second draft of the COFI bill, an institution’s transformation policies need to specify
tangible targets. The second draft also allows the FSCA to use its enforcement powers in relation to
an institution’s governance and transformation frameworks.
Changes to the FAIS Act
Since it first came into effect in 2002, the FAIS Act has been amended a number of times.
The most noteworthy changes have been:
„ The scrapping of the advisery committee on financial service providers (a committee
of industry representatives) in order to “further enhance the independence and impartiality of the
Registrar” in 2014
„ Provision for “publication of administrative actions and notification of official acts on the FSCA
website” instead of in a Government Gazette in 2014
„ A new Section (8A) which made continuous professional development (CPD) a specific Fit and
Proper Requirement in 2014
„ An increase of the maximum penalty from R1m to R10m (or a maximum 10-year prison sentence)
„ Revised Fit and Proper Requirements published in December 2017 (BN194)
„ Amendments to the General Code of Conduct for FSPs (June 2020 and December 2022)
„ Amendments to the determination of Fit and Proper Requirements (June 2020)
„ The FSR Act established the Ombud Council to assist in ensuring that financial services consumers
have access to affordable, effective, independent and fair dispute resolution processes for
complaints about financial products and services. In July 2024 the “Rules on Proceedings of the
Office of the Ombud for Financial Service Providers” made under the FAIS Act in 2003 were revoked
and the Ombud Council replaced these with its rules for the FAIS Ombud. The main change to the
rules was an increase of the maximum compensation the FAIS Ombud may award for financial
prejudice or damages from the previous maximum of R800 000 to R3.5m.

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