Keith Peter, Advice Manager for Old Mutual Personal Finance
South Africa’s financial advice industry is entering a period of significant regulatory transformation as the Conduct of Financial Institutions (COFI) Bill moves closer to enactment, with industry leaders warning that traditional compliance approaches will no longer be sufficient in a rapidly evolving, outcomes driven environment.
Speaking on the shift, Keith Peter, Advice Manager for Old Mutual Personal Finance , said the industry is moving decisively away from a box ticking approach to regulation and towards a model that places greater emphasis on risk management, customer outcomes and professional accountability.
Peter said risk management can no longer be viewed as a defensive function within advisory practices but must now be understood as central to how financial services providers operate and deliver value to customers. “In the past, compliance was treated as something you did because you had to. It was very black and white and largely seen as a defensive requirement just to maintain your license. That approach is no longer sufficient. Risk management has become a core part of how you run a sustainable advice business,” Peter says.
The COFI Bill is expected to accelerate a broader regulatory shift towards outcomes-based supervision, where firms are assessed not only on compliance, but on their position along a spectrum of risk management maturity and customer outcome delivery. Peter explained that this marks a departure from traditional binary compliance models. “It is no longer a yes or no question,” Peter explains. “Advisers will now fall somewhere on a spectrum, and the stronger your risk management practices and customer outcomes, the lighter the regulatory touch will be. The weaker your position, the more intensive the oversight becomes”.
This approach is closely aligned with the regulator’s increasing focus on protecting consumers and ensuring that financial services firms are able to demonstrate sustainable and fair outcomes in practice, rather than simply in documentation. One of the most notable changes emerging from this shift is the way in which advisers are beginning to reposition risk management as part of their customer value proposition, rather than purely an internal governance requirement.
According to Peter, leading advisers are already incorporating risk considerations into customer conversations in a way that enhances trust and clarity.
“Good advisers are not talking about risk management as a compliance burden. They are embedding it into the value they offer customers. They explain continuity of service, professional indemnity cover, succession planning and the safeguards that ensure customers are protected even if something happens to the adviser,” Peter says.
He adds that this approach helps customers understand that the value of advice is not only in investment recommendations, for example, but also in the structures that support long term security and consistency. A key area of focus under the evolving regulatory environment is the quality of advice documentation, which remains central to demonstrating that suitable advice has been provided.
Peter cautions that while advice practices may technically meet legislative requirements, the quality and consistency of advice records often remains a concern. “There is a big difference between ticking a box and capturing what was discussed in a meaningful way. Too often we see standardised wording being used across multiple customers, which does not reflect the individual nature of advice conversations,” says Peter.
He notes that in the event of disputes, regulators and ombud processes rely heavily on written records to determine whether appropriate advice was given.
“If it is not properly recorded, it becomes very difficult to defend the interaction, regardless of what was said at the time,” Peter cautions.
Despite technological advancements and the evolving regulatory environment, Peter emphasises that accountability remains with the professional adviser.
“You cannot delegate accountability. Even if technology assists in the process, the adviser must be able to stand behind the advice given and demonstrate that it is appropriate for the customer,” Peter says.
He also highlights, as part of risk management, the importance of managing customer expectations, noting that dissatisfaction does not automatically indicate poor advice. “A customer being unhappy does not necessarily mean the outcome was wrong. Sometimes it is about expectations rather than the quality of advice, and that distinction is important when assessing outcomes objectively”.
According to Peter, the implementation of the COFI Bill should ultimately strengthen the financial advice profession by improving consistency, accountability and customer trust. While acknowledging that the transition will require adjustment across the industry, Peter says the long-term impact is likely to be positive for both advisers and customers.
“If we get this right, and if advisers genuinely engage with risk management and outcomes-based thinking, the industry will become stronger and more trusted. Customers will ultimately benefit from better aligned and fit for purpose advice as well as more transparent professional standards,” Peter says.
The COFI Bill is expected to be enacted later this year, marking one of the most significant regulatory developments in South Africa’s financial services sector in recent years.
ENDS
