AI software for financial advisers under Consumer Duty

This guide is for owners, compliance leads and operations managers at UK financial advice firms choosing software and AI tools. Two things make it current. The CRM vendor intelliflo writes that “74% now using AI in their advice processes, according to our 2026 advice efficiency survey of 209 respondents”, and since 6 April 2026 COBS 9 has said that its rules do not apply to targeted support, which has its own chapter, COBS 9B (COBS 9.1.1BG). Building Filyst, our case management product, taught us that an approval step only holds when the server enforces it. The sections cover what the software is, which rules apply, the evidence each rule needs, supplier checks, records and cost.

What is AI software for financial advisers?

AI software for financial advisers is the set of systems that carries a client from first meeting to ongoing review, with AI drafting or moving data between them. The centre of it is the financial adviser CRM, also called the back office: the system that holds the client record, the advice history and the fees.

Around the CRM sit the fact-find, which captures client circumstances; research and cashflow tools, which model options; and drafting tools, which turn those facts into a suitability report. The adviser reviews the draft, decides the recommendation and signs it. The firm keeps the record and uses the same data as evidence for the Consumer Duty.

Which rules apply to software in a UK advice firm?

The rules attach to the firm, not to the software, so a tool is only as compliant as the process the firm runs on it. Four rule sets decide what that process needs.

Principle 12 reads: “A firm must act to deliver good outcomes for retail customers.” The other three rule sets decide how the firm proves it did so for a given piece of advice.

Does COBS 9 or COBS 9A apply to your advice?

COBS 9A applies to investment advice in MiFID, equivalent third country or optional exemption business and to advice on insurance-based investment products; COBS 9 covers other personal recommendations to retail clients. COBS 9.1.1R excludes a firm’s “MiFID, equivalent third country or optional exemption business” and insurance-based investment products, and COBS 9.1.1AG points those to COBS 9A.

A MiFID optional exemption firm is, in the FCA Glossary, an exempt investment firm under regulation 8 of the MiFI Regulations 2017: an authorised person with a Part 4A permission that the regulator has exempted from the conditions that usually apply to investment firms. Investment advice given by such a firm is optional exemption business, so COBS 9A.1.1R applies to it. An insurance-based investment product (IBIP) is an investment wrapped in an insurance contract; for IBIP advice only the COBS 9A rules that implemented the Insurance Distribution Directive apply (COBS 9A.1.5R).

For software, the practical point is that one report template does not fit both chapters. COBS 9A.3.3R(2) also requires the report to say whether the client is likely to need a periodic review, which COBS 9.4.7R does not list.

What evidence does the Consumer Duty need from your systems?

PRIN 2A.8.4R requires the governing body to review and approve a report on retail customer outcomes at least once a year. In the same annual review it must confirm whether the firm complies with the Consumer Duty and assess whether its future strategy is consistent with it.

That report is only as good as the data behind it. A CRM that records advice, fees, client communications and service events in structured fields lets the report be counted rather than assembled by hand. Consumer Duty outcomes: the evidence advice firms need lists the evidence for each of the four outcomes, and the Consumer Duty board report templateshows how the governing body’s annual report is laid out. Fees feed the price and value outcome, which the Consumer Duty fair value assessment template covers.

Automation also carries a duty of its own. PRIN 2A.2.8Rstates that “a firm must avoid causing foreseeable harm to retail customers”. A wrong pre-filled figure or a template that drops a disadvantage repeats across every report it touches, so each automated step is tested on real cases before it goes live and changed only through a documented, approved process.

How can AI help write suitability reports?

AI can draft the factual parts of a suitability report from the fact-find and the CRM: circumstances, objectives and current holdings.

The adviser writes or approves the parts that carry the judgement, which COBS 9.4.7R(2) and (3) name as why the transaction is suitable and its possible disadvantages, or under COBS 9A.3.3R(1)how the recommendation meets the client’s objectives and circumstances.

Four controls keep that split visible on the file. Figures come from the CRM or a calculation, never from the model. Each draft shows its source data. Every draft, edit and approval is logged with the reviewer’s name. And the report cannot reach the client until the adviser has approved it.

That last control is the one we learnt most about building Filyst. Filyst rejects self-approval on the server: the person who asks for a case stage to be approved cannot approve it, and the check is on by default for every stage. A rule enforced only in the user interface is a rule someone can step around. Suitability report writing software sets out which sections to automate and which to leave with the adviser, and human in the loop AI under UK GDPR Article 22Aexplains when a person’s review is meaningful in law.

How should an advice firm check a software supplier under SYSC 8?

SYSC 8 applies when the software performs a critical or important operational function. For firms other than common platform firms, SYSC 8.1.4Rtreats a function as critical or important if a defect or failure in it would materially impair the firm’s continuing compliance, its financial performance, or the soundness or continuity of its regulated services.

Ask that question of each system; a CRM that holds every client record is the first to test. Common platform firms use the equivalent test in SYSC 8.1.4AR, and optional exemption firms apply it as guidance.

Whether each SYSC 8 provision is a rule or guidance depends on the firm type, set out in SYSC 1 Annex 1, Table A for common platform firms and most other firms and Table B for MiFID optional exemption firms.

The conditions in SYSC 8.1.8Rset the checks; they bind common platform firms as rules, and other firms read them with “should” in place of “must” (SYSC 1 Annex 1 3.2CR and 3.3R). The supplier is to have the ability, capacity and any authorisation required to perform the function reliably and professionally (8.1.8R(1)). The firm is to be able to terminate the arrangement without detriment to the continuity and quality of its service to clients (8.1.8R(7)). And the firm keeps that continuity also in the event of termination, by moving the function to another provider or doing it itself (8.1.8R(12)). For software that means a full data export in a usable format, written into the contract.

SUP 15.3.8G(1)(e) adds that compliance with Principle 11 includes giving the FCA notice of entering into, or significantly changing, a material outsourcing arrangement. FCA outsourcing rules (SYSC 8): checking a supplier turns these conditions into a checklist.

How long must advice records be kept?

COBS 9.5.2R sets minimum periods for suitability records under COBS 9:

• indefinitely, for a pension transfer, pension conversion, pension opt-out or free-standing additional voluntary contributions (FSAVC);
• five years, for a life policy, personal pension scheme, stakeholder pension scheme or benefits in a defined contribution occupational pension scheme;
• three years, in any other case.

COBS 9.5.3R adds that a firm need not keep suitability records if the client does not proceed with the recommendation. Under COBS 9A, the records follow SYSC 9. For retail investment advice, COBS 9A.4.2AR(3) requires a record of the time and date of the advice, the instrument recommended and the suitability report. Records for IBIP advice are kept for at least the duration of the relationship with the client (COBS 9A.4.3R(3)).

A CRM that stores the product type on each recommendation can set the retention date automatically. Financial adviser record keeping obligations covers the periods and exceptions in full, and the AI audit trail post lists what to log when AI drafts part of the file.

Should an advice firm replace its CRM or connect it?

Connecting the existing CRM carries less risk than replacing it. The back office holds years of client records and advice history, and moving them is a project in its own right. Where the CRM supports a critical or important function, replacing it also engages the SYSC 8 termination and continuity conditions above.

Integration removes re-keying between the systems a firm already uses: fact-find data written once into the CRM, report drafts pulled from it, review dates set from it. What each platform allows depends on its published interface, which Xplan and Intelliflo APIs: what advice firms can integratecompares. Replacement makes sense when the CRM cannot hold the records the firm’s process needs; then the migration is planned and tested like any other outsourcing change.

What should a firm ask before buying an AI tool?

Five questions decide whether an AI drafting tool fits the rules above. Each maps to a provision the firm can point to.

The processor contract has a fixed list of terms; UK GDPR Article 28(3) sets out what it must say.

What does it cost to connect an advice firm’s systems?

With us, a two-week workflow audit costs £950, credited in full against a build agreed within 90 days.

The audit maps systems and re-keying and flags questions for the firm’s compliance person; it is not a compliance review. A single integration costs £900–2,000, a pilot on one workflow starts from £3,000 and a custom CRM or ERP build runs £8,000–25,000 in fixed-price phases. Prices are in GBP and exclude VAT; vendor API and AI usage fees are separate.

This guide is the pillar of our advice firms hub, and every post in it goes deeper on one rule above. The rules here apply AI inside a wider framework that AI in regulated industries: UK rules and human review covers across sectors. Software for financial advisers describes what we build for advice firms, with AI that drafts and a person who signs off.

Frequently asked questions

Sources

1. FCA Handbook PRIN 2.1 (Principle 12)
2. FCA Handbook PRIN 2A.1 (Consumer Duty application)
3. FCA Handbook PRIN 2A.2 (cross-cutting obligations)
4. FCA Handbook PRIN 2A.8 (monitoring and board report)
5. FCA Handbook COBS 9.1 (application, updated 6 April 2026)
6. FCA Handbook COBS 9.4 (suitability reports)
7. FCA Handbook COBS 9.5 (suitability records)
8. FCA Handbook COBS 9A.1 (application)
9. FCA Handbook COBS 9A.3 (suitability reports)
10. FCA Handbook COBS 9A.4 (record keeping)
11. FCA Handbook SYSC 8.1 (outsourcing)
12. FCA Handbook SYSC 1 Annex 1 (Tables A and B)
13. FCA Handbook SUP 15.3 (notification)
14. MiFI Regulations 2017, regulation 8, legislation.gov.uk
15. UK GDPR Article 5 (principles), legislation.gov.uk
16. UK GDPR Article 28 (processors), legislation.gov.uk
17. intelliflo, Why embedded AI is changing the advice journey (2026 advice efficiency survey)