FCA suitability requirements: what your notes must actually capture
COBS 9 and Consumer Duty set out exactly what a suitability record must contain. Most advisers know the theory — but do your meeting notes actually pass muster? A practical checklist.
The regulatory framework
The FCA's suitability requirements for personal recommendations are set out primarily in COBS 9 (for MiFID business) and COBS 9A (for non-MiFID business). Consumer Duty, which came into full force in July 2024, overlays an additional obligation to evidence good client outcomes — not just to follow a process, but to demonstrate that the outcome of the advice was appropriate for the client.
In practice, this means a suitability record must do two things: document the recommendation, and document the basis on which it was suitable. Most advisers do the first reasonably well. The second is where records frequently fall short.
What your suitability record must capture
The following elements are required under COBS 9.4 and the Consumer Duty outcome rules:
Client's investment objectives, including time horizon and purpose of the investment
Capacity for loss — the degree of financial risk the client can absorb without material impact on their standard of living
Attitude to risk — the client's subjective willingness to accept uncertainty in returns
Client's financial situation: income, assets, liabilities, and liquidity needs
Any relevant personal circumstances that could affect the suitability of the recommendation
Vulnerable customer indicators, where present or suspected
The specific recommendation made, and the basis on which it is suitable for this client
Any alternatives considered and why they were not recommended
The most common gaps the FCA finds
In thematic reviews of advice files, the FCA has consistently identified the same categories of suitability record weakness. These are the gaps most likely to result in a finding of inadequate documentation:
Recording risk appetite as a number (e.g. '5/10') without capturing the conversation that established it
Noting the recommendation without documenting the client's financial situation at the time it was made
Failing to record capacity for loss separately from attitude to risk — they are distinct assessments
No record that vulnerable customer factors were considered, even when the adviser concluded none were present
Missing the client's explicit acknowledgement of the recommendation and its risks
Capacity for loss vs attitude to risk: a critical distinction
The single most common documentation failure in the FCA's suitability reviews is conflating capacity for loss with attitude to risk. They are distinct assessments that must be separately evidenced.
Attitude to riskis the client's subjective preference — how comfortable they are with the possibility of losing money. It is measured by questionnaire and conversation. A client can have a high attitude to risk while having a low capacity for loss.
Capacity for loss is an objective assessment — can this client afford to lose some or all of the invested capital without it materially affecting their standard of living? It is derived from their financial situation: income, expenditure, assets, and liabilities.
A suitability record that records risk as “moderate, score 6/10” without separately documenting the capacity for loss assessment is incomplete under COBS 9.2.2. TakeNote's suitability summary template captures both fields explicitly, with the source conversation excerpted for each.
How TakeNote helps
TakeNote's AI-generated suitability summary is structured around the COBS 9.4 requirements. Each required element has a dedicated field in the output, populated from the transcript of the meeting. The summary flags where a required element was not discussed during the meeting — giving the adviser the opportunity to address the gap before the record is finalised, rather than discovering it during an FCA review.
Critically, TakeNote retains the full transcript alongside the summary. The summary is the structured record; the transcript is the evidence. Together, they provide the kind of auditable documentation that withstands scrutiny — not just as a snapshot, but as a full account of what was said and by whom.