Keith Peter, Advice Manager at Old Mutual Personal Finance
Financial advisers are following developments around the proposed Conduct of Financial Institutions Bill (COFI), but many have yet to translate that awareness into structured preparation for its potential impact on their businesses, a survey by Old Mutual Personal Finance has found.
The September COFI Readiness Survey found that 62.4% of respondents were following COFI developments, while 60% said they felt prepared. However, only 16% were very confident about what the proposed legislation could mean for their own businesses, and just 23.2% had begun formal preparation.
For Keith Peter, Advice Manager at Old Mutual Personal Finance, the findings highlight the importance of moving beyond awareness to practical action.
“Following COFI developments is an important first step, but it does not necessarily mean a business is ready to respond. Advisers need to start assessing how the proposed requirements could affect their day-to-day operations, from client onboarding and advice processes to client communication, record-keeping, systems and governance. A structured review can help firms identify potential gaps, prioritise areas requiring attention and determine what further guidance they may need,” he says.
The survey suggests that uncertainty about what preparation entails may be contributing to the gap. Asked why they had not done more, 41% of respondents said they were waiting for greater clarity, while 35.2% identified understanding the requirements as their main immediate concern. Cost was cited by 4.8%, while time and internal capacity were each cited by 7.2%.
Although 47.2% said they were fairly confident that they understood the likely implications of COFI, they still needed more practical detail. Most respondents reported engaging with webinars, industry sessions, articles and regulatory updates, while fewer had reviewed their systems, data, record-keeping or advice processes, or undertaken a formal gap analysis.
“This distinction between understanding the proposed legislation and assessing its practical implications matters. Without a clearer view of existing processes and potential gaps, firms may struggle to determine where to focus their preparation and what changes, if any, their businesses may need,” Peter notes.
The challenge may be particularly pronounced for smaller practices. Nearly two-thirds of respondents described their businesses as independent advice practices or brokerages, while more than half worked alone or in businesses with between two and five advisers. Unlike larger institutions, these firms may have fewer dedicated compliance, legal, risk, and technology resources to support regulatory preparation.
The survey found that additional administration and reporting were the most commonly selected COFI concern, followed by the potential impact on smaller practices. While the proposed framework is intended to uphold consistent standards of conduct and fair customer outcomes across the financial sector, its regulatory requirements and supervisory approach are expected to take account of the nature, size, complexity and risk profile of different financial institutions. This proportional approach will be important in ensuring that smaller practices can understand and meet their obligations without facing unnecessarily onerous compliance requirements.
Respondents also highlighted the need for clearer communication and practical tools. Only 16% described existing COFI communication as very clear and practical, while 78.4% identified some form of communication gap. A plain language overview of COFI was requested by 58.1% of respondents, and 55.8% wanted a practical readiness checklist. When asked which single resource would be most useful immediately, a “where to start” checklist was the leading choice, followed by a small business readiness guide.
“For advisers, a useful first step is to review current business practices and identify areas that may require closer attention as greater regulatory clarity emerges. This could include examining how clients are onboarded, how advice is delivered and documented, how information is communicated to clients, and whether record-keeping, systems and governance arrangements adequately support these processes,” says Peter.
He adds that firms can then prioritise questions for their compliance professionals and monitor further regulatory guidance, rather than waiting for every detail to be settled before beginning an initial assessment.
ENDS
