FCA suitability report requirements are often treated as a document-production exercise: make sure the right headings are present, insert the right standard wording, and get the report issued.
That is understandable, but it misses the bigger point.
A suitability report is part of the evidence trail for advice. It should help the client understand the recommendation and help the firm show how the recommendation follows from the information gathered about that client. The FCA Handbook does not frame suitability as a generic explanation of a product. It links suitability to the client's knowledge and experience, financial situation, investment objectives, demands and needs, and the firm's obligation to take reasonable steps to ensure that the recommendation is suitable.
This article is practical guidance for advice firms, paraplanners and reviewers. It is informed by FCA Handbook material, but it is not legal or compliance advice. Firms should always check the current FCA Handbook and their own compliance framework before relying on any suitability report process or template.
Quick answer - Suitability reports
A suitability report should explain the advice being given, why it is suitable for the client, how it meets the client's objectives and circumstances, and the main points the client needs to understand before acting on the recommendation.
In practice, a strong report should make clear:
what advice was requested and what advice is being given
what information the firm used to assess suitability
the client's relevant objectives, circumstances, knowledge and experience
the recommendation and the reasons for it
the risks, disadvantages, costs and trade-offs the client should understand
how the recommendation fits the client's demands and needs
what the client needs to do next
how the report can be checked against the advice file
The report should not read like a standalone product brochure. It should read like the written explanation of a client-specific recommendation.
Start with the FCA source, then the firm's own framework
The right starting point is not a generic suitability report checklist. It is the FCA Handbook and the firm's own compliance framework.
For non-MiFID business and non-insurance-based investment products, the key suitability rules sit in COBS 9. For MiFID business and insurance-based investment products, the suitability provisions sit in COBS 9A. Firms may also need to consider related FCA rules and guidance depending on the advice area, product type, service model and client category.
That means a suitability report template should be designed around the firm's actual advice activity. A pension transfer recommendation, an investment switch, an income withdrawal recommendation and an ongoing advice review may all need different evidence, wording and review checks.
A good template helps the adviser or paraplanner cover the right areas consistently. But the template is not the requirement. The requirement is that the advice process, the assessment of suitability and the client communication all stand up in context.
Suitability starts before the report is written
The report is not where suitability is created. It is where the firm explains the suitability assessment that should already be supported by the client file.
COBS 9.2 requires a firm to take reasonable steps to ensure that a personal recommendation, or decision to trade, is suitable for its client. It also requires the firm to obtain the necessary information regarding the client's knowledge and experience in the relevant investment field, financial situation and investment objectives.
COBS 9A takes the same client-specific logic into the MiFID and insurance-based investment product context. It makes clear that suitability assessment is relevant not only when recommending that a client buys an investment, but also for decisions and recommendations about whether to buy, hold or sell.
For report writing, this matters because the report should not simply say that a recommendation is suitable. It should show why the recommendation is suitable by linking the recommendation back to the client information the firm gathered.
What information should the suitability report draw from?
The FCA suitability rules point firms back to the information needed to assess suitability. A report should therefore be drafted from the client file, not from generic product wording alone.
Relevant information may include:
the client's objectives
the client's investment experience and knowledge
the client's financial situation
the client's capacity for loss, where relevant
the client's attitude to risk, where relevant
income, assets, investments, liabilities and regular commitments, where relevant
time horizon
tax position, where relevant
existing arrangements
preferences, constraints and exclusions
demands and needs
the advice scope agreed with the client
Not every report needs to repeat every fact in the file. The point is relevance. The report should include the information needed to understand the recommendation and the firm's reasoning.
A common weakness is to include client facts without using them. For example, a report may state a client's objectives, risk profile and time horizon, then move straight into product description. A stronger report uses those facts to explain the recommendation.
What the report needs to make clear
Most firms will need the suitability report to cover the following areas.
1. The scope of the advice
The report should make clear what the firm has and has not advised on.
This is important because a recommendation can only be understood properly in relation to the advice scope. If the advice is limited to a specific pension, investment, wrapper or objective, the report should avoid implying that a wider review has been completed.
Useful questions for the report to answer include:
What advice did the client ask for?
What did the firm agree to advise on?
Were any areas excluded from the advice?
Is this initial advice, replacement advice, a switch, a hold recommendation, an ongoing review or another form of recommendation?
What assumptions or limitations does the client need to understand?
The report should not bury scope in boilerplate. Scope is part of the client's understanding of the recommendation.
2. The client's objectives and circumstances
The report should explain the client's relevant objectives and circumstances in a way that supports the recommendation.
This does not mean repeating the fact find in full. It means selecting and explaining the facts that matter.
For example:
Why is the client seeking advice now?
What outcome does the client want?
What is the client's time horizon?
What is the client's financial position?
What commitments or constraints affect the advice?
What knowledge or experience is relevant to the recommendation?
What risks is the client willing and able to take?
The FCA's suitability framework is built around the client's circumstances. A report that could be sent to almost any client with the same product recommendation is unlikely to be doing enough explanatory work.
3. The recommendation
The report should state the recommendation clearly.
This includes the product, wrapper, investment solution, provider, contribution, transfer, switch, withdrawal, hold recommendation or other action being recommended, depending on the advice context.
The client should not have to infer the recommendation from the surrounding text. The report should make the recommendation easy to find and easy to understand.
4. Why the recommendation is suitable
This is the centre of the report.
The report should explain why the recommendation is suitable for this client, not only why the product or strategy exists.
A useful structure is:
Because the client wants [objective]
and their relevant circumstances are [facts]
and their risk position, time horizon or financial situation is [summary]
the firm recommends [recommendation]
because [client-specific reasons]
while noting [risks, disadvantages, costs or limitations]
This is where many reports become too generic. Phrases like "this meets your objectives" or "this is suitable for your needs" are not enough on their own. The report should show the reasoning.
5. Risks and disadvantages
A suitability report should not only explain the benefits of the recommendation. It should also make the main risks and disadvantages clear.
The exact risks will depend on the advice, but may include:
investment risk
inflation risk
sequencing or withdrawal risk
loss of guarantees or benefits
product charges
early exit penalties
tax implications
reduced flexibility
market volatility
reliance on assumptions
the consequences of not reviewing the arrangement
The FCA's client communication rules are relevant here. Communications should be fair, clear and not misleading. A suitability report that highlights the rationale but obscures the trade-offs is unlikely to support good client understanding.
6. Costs and charges
Where costs and charges are relevant to the recommendation, the report should explain them in a way the client can understand.
This may include advice charges, platform charges, product charges, fund charges, ongoing service charges and any other material costs connected with the recommendation.
The report should also explain why the recommendation remains suitable after those costs are considered. It is not enough to attach a cost disclosure and leave the client to work out the impact alone.
7. Replacement, switch or transfer rationale
Where the advice involves moving from an existing arrangement to a new one, the suitability explanation should be especially clear.
The report should explain:
what the client has now
what is being recommended instead
what the client may gain
what the client may lose
what costs, penalties or risks apply
why the change is suitable in light of the client's circumstances
This is often where the advice file and the suitability report need to align most tightly. If the file contains the real reasoning but the report only contains generic wording, the client may not understand the recommendation and the reviewer may have to reconstruct the rationale.
8. Next steps and client understanding
The report should make clear what happens next.
Depending on the advice, this may include:
what the client needs to sign or approve
what will happen after acceptance
when the recommendation will be implemented
what the client should read alongside the report
what the client should query before proceeding
when the arrangement should be reviewed
A suitability report should leave the client clearer, not simply documented.
MiFID, insurance-based investment products and COBS 9A
Firms should be careful not to treat all suitability reports as if the same rules apply in exactly the same way.
COBS 9 applies to suitability for certain non-MiFID and non-insurance-based investment product business. COBS 9A applies to MiFID business and insurance-based investment products.
COBS 9A includes specific provisions on information to be provided to the client. For insurance-based investment products, it requires firms not to create ambiguity or confusion about their responsibilities in assessing suitability and to inform the client clearly and simply that the reason for assessing suitability is to enable the firm to act in the client's best interest.
For report drafting, that creates two practical lessons:
the report should be clear about the firm's role and recommendation
the report should avoid wording that makes responsibility unclear or implies the client is assessing suitability alone
The client can choose whether to proceed, but the firm is responsible for the recommendation it gives.
Fair, clear and not misleading
Suitability reports are not only compliance records. They are client communications.
COBS 9A guidance points firms to the fair, clear and not misleading communication standard when providing a suitability report. That standard should influence the writing style of the report.
In practical terms, that means the report should:
use plain English where possible
explain technical terms
avoid hiding important warnings in dense text
give balanced explanations of benefits and risks
avoid over-promising outcomes
distinguish facts, assumptions and recommendations
avoid boilerplate that the client is unlikely to understand
make the recommended action easy to identify
A report can include all the expected sections and still be weak if it is difficult for the client to understand.
Reviewability matters
A suitability report also needs to be reviewable.
The reviewer should be able to compare the report with the advice file and see how the recommendation follows from the evidence. That does not mean the report needs to repeat the whole file. It means the report should be coherent, specific and traceable.
A reviewable report usually makes it clear:
which client facts are driving the recommendation
which objectives are being addressed
which risks and disadvantages were considered
why alternatives were discounted, where relevant
what assumptions were made
what wording is standard and what wording is client-specific
whether the recommendation matches the firm's template and advice standards
The FCA Handbook also includes record-keeping expectations. SYSC 3.2.20 requires firms to take reasonable care to make and retain adequate records of matters and dealings that are subject to regulatory requirements and standards. For advice firms, the suitability report should sit within that wider record, not replace it.
Why generic suitability reports create risk
Generic suitability reports can sound professional while still failing to explain suitability.
Common problems include:
long product descriptions with little client-specific reasoning
objectives listed but not connected to the recommendation
risk profile stated but not applied
costs disclosed but not explained
replacement advice described without a clear comparison
disadvantages mentioned briefly but not explored
template wording left in place where client-specific wording is needed
vague phrases such as "this is suitable for your needs" without the "why"
The more generic the report, the harder it is for the client to understand the advice and the harder it is for the firm to evidence the reasoning behind it.
How templates help
Firm-standard templates are useful. They help advisers and paraplanners cover the required areas consistently and make reports easier to review.
A good suitability report template should:
follow the firm's advice process
reflect the relevant FCA rules and guidance
prompt for client-specific reasoning
separate mandatory wording from editable reasoning
make risks, disadvantages and charges hard to miss
help reviewers locate key parts of the advice story
reduce rekeying without flattening the client's circumstances
support version control and approval
The risk is that templates become a substitute for thinking. The best templates create structure without turning the report into boilerplate.
Where AI-assisted drafting fits
AI can help assemble information and draft within the firm's template, but it should not decide suitability, replace adviser judgement or bypass the firm's review process.
In a suitability report workflow, AI is safest and most useful when it supports controlled drafting. For example, it can help:
organise client-file information into the right sections
produce a first draft using the firm's template
identify missing information for human review
keep wording consistent with house style
reduce duplicated manual drafting
make the rationale easier to review
But the firm still needs human oversight. Advisers and paraplanners should be able to see what information was used, check the reasoning, edit the wording and approve the final report before it is issued.
Firms should also consider how any AI-assisted drafting tool handles client data, permissions and security. You can read more about Templi's approach to security.
For advice firms, the important question is not "can AI write a suitability report?" It is "can the firm evidence, review and approve the suitability reasoning before the report reaches the client?"
Practical suitability report checklist
Before a report is sent, firms may want reviewers to check:
Does the report follow the firm's approved template?
Is the advice scope clear?
Are the client's relevant objectives and circumstances included?
Does the report explain the recommendation in plain language?
Does it connect the recommendation to the client's file?
Are the main risks and disadvantages clear?
Are relevant costs and charges explained?
Are replacement, switch or transfer trade-offs clearly covered, where relevant?
Are assumptions and limitations stated?
Is the wording fair, clear and not misleading?
Is the report consistent with the advice file?
Has the right person reviewed and approved it before issue?
This checklist does not replace the FCA Handbook or the firm's compliance framework. It is a practical way to test whether the report is doing its job.
What this means
FCA suitability report requirements are not only about including the right sections. They are about producing a clear, client-specific, reviewable explanation of advice.
The strongest reports connect the recommendation to the client's circumstances, explain the trade-offs, support client understanding and fit the firm's review process.
For firms using templates or AI-assisted drafting, the standard should remain the same: the report needs to be grounded in the client file, aligned with the firm's compliance framework and approved by the right human before it is issued.
See how Templi supports suitability report drafting
Templi helps advice firms draft suitability reports inside their own templates, using the information already held in the client file.
It is designed to support adviser and paraplanner workflows, not replace them. Teams can use Templi to reduce manual drafting, keep reports aligned with firm-standard wording, and make the rationale easier to review before a human approves the final report.
If your firm wants suitability reports that are faster to produce, easier to check, and still grounded in your advice process, book a Templi demo.
FCA Handbook sources
Disclaimer: This article is intended as general guidance only. It should not be taken as legal, regulatory, compliance or financial advice. Firms should refer to the current FCA Handbook and seek appropriate professional or compliance support before making decisions about their suitability report process.
Next step
See how Templi supports suitability report drafting.
Templi helps advice firms draft inside their own templates, using client-file information and keeping human review central.