Suitability report writing software: what the FCA allows

By Syed Husnain Khalid · Published 8 October 2026 · Last checked 8 October 2026 · 10 min read

Drafted with AI. Each claim was checked against the primary sources listed below by AI on 8 October 2026; a person has not reviewed it yet.

Short answer

The FCA has no AI-specific rules for suitability report writing software: it says it will rely on existing frameworks. Software can draft the report, but the firm stays responsible for what COBS 9.4.7R or COBS 9A.3 says the report must contain. We recommend an adviser reviews and signs off every draft before the client sees it.

This guide is for advisers, paraplanners and operations managers at UK financial advice firms choosing or building software that drafts suitability reports. The FCA updated its page on AI on 2 October 2026 and still plans no extra regulations for AI, so the existing suitability rules decide what a drafted report has to say. Building Filyst, our case management product for immigration firms, taught us that sign-off holds only when the system rejects self-approval. The sections cover which chapter applies, when a report is due, its contents, what software can draft, sign-off, a template and record keeping.

What is suitability report writing software?

Suitability report writing software is a tool that drafts a suitability report, sometimes called suitability report automation, from the firm’s fact-find and back-office data. A suitability report is the document a firm gives a retail client to explain why a personal recommendation suits them. The software assembles the client facts; the firm decides what to recommend and why.

A personal recommendation, in the FCA Glossary, is a recommendation to an investor to buy, sell, hold or otherwise deal in a particular investment that is presented as suitable for them or based on their circumstances, and is not issued exclusively to the public. A personal recommendation to a retail client triggers the report. The fact-find is the firm’s record of the information obtained from the client, and it is the input the software drafts from.

What does the FCA allow software to do?

The FCA has no AI-specific rules for drafting suitability reports. Its page AI and the FCA: our approach(last updated 2 October 2026) says: “We do not plan to introduce extra regulations for AI. Instead, we’ll rely on existing frameworks.”

The existing frameworks put the duty on the firm. COBS 9.4.7R(2)requires the report to explain “why the firm has concluded that the recommended transaction is suitable”. For MiFID business, COBS 9A.3.1R(1)says a firm must not create “any ambiguity or confusion about its responsibilities” when assessing suitability. A report drafted by software is still the firm’s report, and the firm answers for every sentence in it.

Which rules apply: COBS 9 or COBS 9A?

The type of business decides the chapter, not the type of firm. COBS 9.1.1R applies COBS 9 to a firm that makes personal recommendations to retail clients on designated investments or manages investments or pension scheme assets, other than MiFID, equivalent third country or optional exemption business or an insurance-based investment product. COBS 9A.1.1R applies COBS 9A to those excluded kinds of advice.

Optional exemption business is the business of a MiFID optional exemption firm, a firm that advises and passes on orders under an exemption in regulation 8 of the MiFI Regulations. PERG 13.5 Q49says the exemption “is likely to be relevant to many financial advisers”. For those firms, investment advice falls under COBS 9A, and the report rule is COBS 9A.3.2R, not COBS 9.4.1R. An insurance-based investment product (IBIP) is a contract of insurance whose maturity or surrender value is wholly or partially exposed to market fluctuations; pension products and life cover paying only on death or incapacity are excluded.

Type of advice to a retail client	Chapter	Report rule
Investment advice in MiFID business	COBS 9A	COBS 9A.3.2R and 9A.3.3R
Investment advice in optional exemption (Article 3) business	COBS 9A	COBS 9A.3.2R and 9A.3.3R
Investment advice on an insurance-based investment product	COBS 9A (rules from the Insurance Distribution Directive only, COBS 9A.1.5R)	COBS 9A.3.2R(2)(b) and 9A.3.3AR
Other personal recommendations, such as on personal pensions, pension transfers and life policies	COBS 9	COBS 9.4
Targeted support under COBS 9B	Neither (COBS 9.1.1BG, 9A.1.1AG)	Not covered here

When is a suitability report required?

Under COBS 9A, a firm must give a report whenever it provides investment advice to a retail client, before the transaction is concluded and in a durable medium (COBS 9A.3.2R(2)). If distance communication prevents that, the report can follow immediately after the client is bound, but only if the client consented and was offered the option of delaying the transaction to receive it first (COBS 9A.3.2R(3)).

Under COBS 9, COBS 9.4.1R requires a report to a retail client after a personal recommendation when the client:

acquires or sells all or part of a holding in a regulated collective investment scheme;
acquires or sells shares in an investment trust bought through an investment trust savings scheme;
acquires or sells investment trust shares held in an ISA promoted as the means for investing in one or more specific investment trusts;
buys, sells, surrenders, converts or cancels rights under, or suspends contributions to, a personal or stakeholder pension scheme;
elects to make income withdrawals, an uncrystallised funds pension lump sum payment or purchase a short-term annuity;
enters into a pension opt-out.

COBS 9.4.2R adds every personal recommendation on a life policy, and COBS 9.4.2AR adds every personal recommendation on a pension transfer or pension conversion. COBS 9.4.3R lists four exceptions: a firm acting as investment manager recommending a regulated collective investment scheme; a client habitually resident outside the UK and not present in the UK when consenting to the proposal form; a recommendation to increase a regular premium on an existing contract; and a recommendation to add a single premium or contribution to an existing packaged product.

COBS 9.4.4R sets the timing: for a life policy, before the contract is concluded; for a personal or stakeholder pension that is not a life policy and carries a cancellation right, no later than the 14th day after the contract is concluded; for a pension transfer or conversion, in good time before the transaction; otherwise, when or as soon as possible after the transaction.

What must a suitability report contain?

COBS 9.4.7R says the report must, at least, contain four things, the fourth only for a life policy:

the client’s demands and needs, specified on the basis of the information obtained from the client;
why the firm has concluded that the recommended transaction is suitable, having regard to that information;
any possible disadvantages of the transaction for the client;
for a life policy, a personalised recommendation explaining why a particular life policy would best meet the client’s demands and needs.

COBS 9.4.8R requires the detail to match the complexity of the transaction and the type of client. For income withdrawals, short-term annuities and uncrystallised funds pension lump sums, COBS 9.4.10G says the disadvantages should include the risk factors, such as erosion of the fund and income that may not be sustainable. For a pension transfer or conversion, COBS 9.4.11R requires a one page summary at the front, with six items including a summary of the recommendation and the charges, unless the only safeguarded benefit is a guaranteed annuity rate.

Report content	COBS 9 (COBS 9.4.7R)	COBS 9A (MiFID and optional exemption business)
The advice	Not listed separately	The advice given (COBS 9A.3.2R(2)(a), 9A.3.3R(1)(a))
Client basis	Demands and needs, from the information obtained	Preferences, objectives and other characteristics (COBS 9A.3.2R(2)(a))
Why it suits	Why the firm concluded the transaction is suitable	How the recommendation is suitable, with reference to investment term, knowledge and experience, and attitude to risk and capacity for loss (COBS 9A.3.3R(1)(b))
Downsides	Any possible disadvantages	Not listed separately; COBS 9A.3.4G points to COBS 4.2.1R (fair, clear and not misleading)
Reviews	Not listed	Whether the client is likely to need a periodic review, with the client's attention drawn to it (COBS 9A.3.3R(2))
Product-specific	Life policy: personalised recommendation (9.4.7R(4))	IBIP: demands and needs and a personalised recommendation (9A.3.2R(2)(b)); a suitability statement (9A.3.3AR)

Which parts can software draft?

Software can draft the sections that restate facts the firm already holds; the reasoning that makes the recommendation the firm’s own stays with a person. The split below is our recommendation, not an FCA rule.

Section	Who drafts	Who decides
Client circumstances and objectives	Software, from the fact-find	Adviser checks against the fact-find
Holdings, figures and charges	Software, from the back office	Adviser checks the numbers
Demands and needs, or investment term, knowledge, risk and capacity for loss	Software, from the fact-find	Adviser confirms or rewrites
Why the recommendation is suitable	Adviser, optionally from a draft	Adviser
Disadvantages and risks	Adviser, optionally from a draft	Adviser
Final report	Assembled by software	Adviser signs off before it is sent

Software assembles the facts. A person owns the recommendation.

Back-office APIs supply the facts the draft uses, and the Xplan and Intelliflo APIs guide lists what each one exposes.

Who signs off a suitability report?

No rule in COBS 9.4 or COBS 9A.3 requires an adviser’s signature: the duty sits with the firm. Adviser sign-off is good practice, and we recommend it for every drafted report, because it is how the firm shows a person reached the conclusion the report explains.

Sign-off works when the adviser sees each drafted section beside its source data, edits it, and approves it, and the system logs the draft, the changes and the approval. Article 22A of the UK GDPR treats a decision as based solely on automated processing where there is no meaningful human involvement, which human in the loop AI under UK GDPR Article 22A explains.

Building Filyst showed us where sign-off breaks. Filyst rejects self-approval on the server, so the person who asked for a case stage to be approved cannot approve it, and the check is on by default for every stage. A review step the reviewer can skip is a habit, not a control.

Report drafting is one use of AI that AI software for financial advisers under Consumer Duty sets in the wider rules, and software for financial advisers describes the drafting and sign-off workflows we build.

Suitability report template

This template is a starting point to adapt, not an FCA form: COBS 9.4.7R and COBS 9A.3 set minimum contents, not a layout. It follows COBS 9A for investment advice, with the COBS 9 items marked. Replace every [bracket], delete what does not apply, and have your compliance person approve the result before use.

1. About this report

Prepared for [client name] by [firm name] on [DD Month YYYY], following our meeting on [date]. This report explains the advice we have given you and why we consider it suitable. [COBS 9A: give it before the transaction is concluded.]

2. What you asked us to do

You asked us to [advise on / review / recommend]. Your objectives are [objectives]. [COBS 9: state your demands and needs, from the information you gave us, COBS 9.4.7R(1).]

3. Your circumstances

[Age, family, health, employment, income and expenditure, assets and liabilities, existing plans, taken from the fact-find dated [date].] Please tell us if anything here is wrong.

4. Your investment term, knowledge and risk

Investment term: [years]. Knowledge and experience of investing: [summary]. Attitude to risk: [result and how assessed]. Capacity for loss: [assessment and why]. [COBS 9A.3.3R(1)(b)]

5. Our recommendation

We recommend that you [action] [product, provider and amount]. [COBS 9A.3.2R(2)(a): the advice given.]

6. Why we consider this suitable for you

[How the recommendation meets your objectives, term, knowledge and experience, attitude to risk and capacity for loss, and why we prefer it to [alternatives considered].] [COBS 9A.3.3R(1); COBS 9.4.7R(2): why the firm has concluded it is suitable.]

7. Disadvantages and risks

[Each possible disadvantage of the transaction for you, in plain words.] [COBS 9.4.7R(3). For income withdrawals, include the risk factors in COBS 9.4.10G.]

8. Life policy or insurance-based investment product

[Only if relevant: why this particular policy or product best meets your demands and needs. COBS 9.4.7R(4); COBS 9A.3.2R(2)(b).]

9. Reviews

[We do / do not] expect this recommendation to need a periodic review because [reason]. [We will review it every [period] / You will need to ask us for a review.] [COBS 9A.3.3R(2)]

10. Sign-off

Draft prepared by [name or system] on [date]. Reviewed, edited and approved by [adviser name], [role], on [DD Month YYYY]. Sent to the client on [date] by [method]. [Good practice, not a COBS rule.]

How long must suitability records be kept?

COBS 9.5.2R sets minimum periods for COBS 9 suitability records: indefinitely for a pension transfer, pension conversion, pension opt-out or free-standing additional voluntary contribution (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 says a firm need not keep them if the client does not proceed with the recommendation.

For MiFID and optional exemption business, COBS 9A.4.2AR(3) requires firms subject to SYSC 9 to keep a record of the time and date of the advice, the financial instrument recommended and the suitability report itself. For IBIPs, COBS 9A.4.3R(3) requires suitability records to be kept for at least the duration of the client relationship. Each finished report becomes a suitability record, and financial adviser record keeping obligations sets out the full retention periods.

Frequently asked questions

Can AI write a suitability report?

AI can draft one. The FCA says it plans no extra AI rules, so the report still has to meet COBS 9.4.7R or COBS 9A.3 and remains the firm's responsibility. We recommend an adviser reviews, edits and signs off every draft.

What must a suitability report include?

Under COBS 9.4.7R: the client's demands and needs, why the firm concluded the transaction is suitable, any possible disadvantages, and for a life policy a personalised recommendation. Under COBS 9A.3.3R: the advice, how it suits the client's investment term, knowledge and experience, attitude to risk and capacity for loss, and whether a periodic review is likely to be needed.

Do optional exemption (Article 3) firms follow COBS 9?

Not for their investment advice. COBS 9A.1.1R covers MiFID, equivalent third country and optional exemption business and advice on insurance-based investment products. Other advice, such as on personal pensions, pension transfers and life policies, stays under COBS 9.

Does the adviser have to sign the suitability report?

No COBS rule requires an adviser's signature; COBS 9.4.7R puts the duty on the firm. Adviser sign-off is good practice and the clearest way to show a person reached the conclusion.

Is there an FCA suitability report template?

COBS 9.4.7R and COBS 9A.3 set the minimum contents of a report, not a layout, so each firm writes its own. The template in this guide is a starting point to adapt.