The FSA's templates for initial disclosure documents (IDD) and menus have a higher number of non-compliance problems among firms that use them compared to those who create their own versions.
An FSA review of its implementation of COBS, found firms that created their own IDD and menu without using the FSA's recommended templates produce better documentation than those who use the COBS guidance.
The FSA also says it remains concerned a large number of firms only had a basic understanding of COBS months after it came into effect.
COBS guidance, published in November 2007, contained a number of templates for firms to use when constructing their IDD and menu.
However, the FSA found a high proportion were failing to comply in a number of areas, including missing information on the cost of personal pension schemes, incorrect payment options, out-of-date text and incorrect regulatory information.
Bizarrely, firms that did not use the FSA's templates were found to be 100% compliant, suggesting the guidance is misleading.
The FSA says those firms were taking advantage of the flexibility offered by COBS, and claims the main objective of COBS is to move firms away from rigid rules.
Regulators are still analysing the data to find out why firms using the template are not complying, but suggests that the type of firm creating their own IDD or menu may account for the difference.
"A firm that has taken the time to put together its own documents has probably put more thought and effort into the process than firms which use the template," says an FSA spokesperson.
At present, the FSA does not plan to introduce new templates to reduce the problems seen in today's review, but says the review process is ongoing.
COBS will continue to be reviewed over the next year, with a particular focus on consumer outcomes and the behaviour of firms, with a final report due for publication in early 2010.
Contact: John Bakie, Tel: 020 7484 9805, e-mail: [email protected]IFAonline
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