Suitability report requirements: COBS 9 and 9A in plain English

The suitability report is the document a client is most likely to keep and the one a reviewer is most likely to read first. It has to do two jobs at once: meet a precise set of regulatory requirements, and explain a recommendation to a person who may never have read a financial document cover to cover. It is easy to manage the first and fail the second, with a report that runs to dozens of pages, technically complete and practically unread.

This guide sets out the suitability report requirements in the FCA Handbook, what they mean in practice, and how to structure a report that satisfies the rules and the reader.

The suitability report requirements in COBS 9.4.7R

Under COBS 9.4.7R, the suitability report must, among other things:

• "specify… the client's demands and needs";
• "explain why the firm has concluded that the recommended transaction is suitable"; and
• "explain any possible disadvantages of the transaction for the client".

Each of these is an active requirement. In practice, "specify" means the demands and needs must be set out, not left to be inferred from a fact find. "Explain why" means the report must show reasoning, connecting the client's circumstances to the recommendation. And the disadvantages must be explained, which a generic risk warning at the back of the report rarely does well.

The requirements in COBS 9A.3.3R

COBS 9A.3.3R, in the version in force from 23 October 2025, requires the report to include "an outline of… the advice given and how the recommendation is suitable… with reference to… the investment term required… their knowledge and experience… their attitude to risk and capacity for loss."

That gives a useful checklist of the points the suitability reasoning must reach:

• the investment term the client needs;
• the client's knowledge and experience;
• their attitude to risk;
• their capacity for loss.

Those links depend on the information gathered at the start. COBS 9A.2.1R requires firms to obtain the client's knowledge and experience, "financial situation including his ability to bear losses" and "investment objectives including his risk tolerance". A report can only explain suitability against facts the file actually holds.

Which chapter applies depends on the business you are doing, so check the Handbook against your own permissions and products. Writing to one house standard that covers both chapters is one way to keep templates simple. Note too that CP26/10 proposes merging COBS 9 and COBS 9A. That is a consultation proposal and the current rules continue to apply.

Keeping the record

The report is also a record. COBS 9.5 sets retention periods for suitability records: "indefinitely" for pension transfers, conversions and opt-outs, "five years" for life policies and pensions, and "three years" in other cases. More broadly, SYSC 9.1.1R says: "A firm (other than a common platform firm) must arrange for orderly records to be kept of its business and internal organisation… sufficient to enable the FCA to monitor the firm's compliance".

Why reports go unread, and why that matters

Consumer understanding is one of the four outcomes of the Consumer Duty. A report that meets every rule but that the client cannot follow is a weak piece of evidence that the client understood what they agreed to.

The common causes are familiar:

• long sections of standard text that are the same in every report;
• the recommendation buried after pages of background;
• disadvantages listed in general terms, rather than as they apply to this client;
• attitude to risk described as a questionnaire score with no explanation of what it means;
• technical language where a plain word would do.

Reports are also slow to write. Vendor research from Advisory AI, reported by Professional Paraplanner, found that 71.9% of firms spend 1 to 7 hours per suitability report. That time pressure is one reason firms lean on templates and standard text.

A structure that serves the rules and the reader

There is no prescribed layout. The order below is one that puts the client's questions first while making sure each requirement is met.

1. What we recommend, in a paragraph. The recommendation, in plain words, on the first page.
2. What you told us you need. The client's demands and needs and their objectives, in their own terms where possible. This addresses COBS 9.4.7R.
3. Why this suits you. The reasoning, linked explicitly to the investment term, knowledge and experience, attitude to risk and capacity for loss, as COBS 9A.3.3R describes.
4. What could go wrong. The disadvantages of this recommendation for this client, written specifically, not as a generic warning.
5. What it costs. The charges, and the ongoing service if there is one.
6. Alternatives considered. Briefly, what else was looked at and why it was not preferred.
7. What happens next. Actions, timescales and the next review.
8. Appendices. The detailed product information and standard disclosures, after the explanation rather than before it.

Before sending, read the report as the client would. Could they say, in a sentence, what you recommend and why? Could they name the main disadvantage? If not, the report needs another pass.

Where the inputs come from

A strong report rests on a strong record of what the client said. That is where Carbon helps. Carbon does not write the suitability report itself. It produces four client documents from a recorded Fireflies meeting: a discovery document, a scope of work, a client value summary and an attitude to risk report.

The attitude to risk report includes a calculated risk score, a one to ten scale with the client's position marked, a plain-English explanation of what that level means and an indicative asset allocation. Carbon can also pull risk questionnaire responses from a Google form. Documents are written in your firm's house style and word list, carry your branding, are fully editable and export to Word or PDF. By our estimate, a client document that takes around two hours to draft by hand takes about fifteen minutes with Carbon.

Those documents give the adviser a clear, consistent record of the client's needs and risk position to build the suitability reasoning on. The recommendation, and the report that explains it, remain the adviser's work and the firm's responsibility. For checking finished files against the rules, see our compliance file review checklist, and for the risk side, capacity for loss vs attitude to risk.

Frequently asked questions

What must a suitability report include?

Under COBS 9.4.7R it must specify the client's demands and needs, explain why the firm has concluded the recommendation is suitable, and explain any possible disadvantages for the client. COBS 9A.3.3R requires an outline of how the recommendation is suitable with reference to the investment term, knowledge and experience, attitude to risk and capacity for loss.

How long should we keep suitability records?

COBS 9.5 sets the periods: indefinitely for pension transfers, conversions and opt-outs, five years for life policies and pensions, and three years in other cases.

Is a long suitability report safer?

Not necessarily. Length does not show that a client understood the advice. A report that sets out the reasoning and the disadvantages clearly, with standard material in appendices, is easier for the client to follow and easier for a reviewer to check.

To see how Carbon turns a client meeting into discovery, scope and attitude to risk documents, read about Carbon or book a twenty-minute demo with Adam Booth on Microsoft Teams, run on a demo firm with nothing to prepare.