COBS Suitability for Investment Advice and Wealth Management in 2026

Investment suitability is not a single questionnaire or risk score. The FCA's COBS framework requires firms to obtain and use the information necessary for the investment service being provided and to have a reasonable basis for concluding that the recommendation or portfolio is suitable for the client.

In 2026, the current rulebook still contains separate suitability chapters. COBS 9A applies to relevant MiFID, equivalent third-country and optional exemption business involving investment advice or portfolio management, and to specified insurance-based investment product business. COBS 9 continues to apply to other investment suitability situations within its scope. Firms should identify the correct regime before applying a standard advice process.

The FCA is consulting through CP26/10 on simplifying and consolidating pensions and investment advice rules. Those proposals are important for future design, but they are not the current rulebook as at August 2026. Advice firms should therefore comply with today's COBS 9 and 9A requirements while planning for potential change.

Start by identifying which suitability regime applies

A suitability review should begin with scope. COBS 9A contains the MiFID and insurance-based investment product suitability provisions identified by the Handbook, while COBS 9 applies to other investment business within its own application provisions.

This matters because firms can operate several services at once. A wealth group may provide MiFID investment advice, discretionary portfolio management, insurance-based investment advice and other regulated services. Applying one generic checklist can obscure differences in what the relevant chapter requires.

Targeted support adds another distinction from April 2026. COBS 9 itself makes clear that the chapter does not apply to a targeted support service within COBS 9B. A firm should therefore label the service accurately rather than allow a customer journey to drift between guidance, targeted support and personalised advice without a clear regulatory basis.

Compliance procedures should map each proposition to the applicable COBS chapter, permissions and customer disclosures before the advice process is designed.

The client information needs to support a real decision

Under COBS 9A, the firm must obtain information necessary to understand essential facts about the client and determine whether the transaction or service meets the client's investment objectives, financial situation and other relevant requirements. This includes risk tolerance, knowledge and experience and, where relevant, the ability to bear losses.

A long fact-find does not demonstrate suitability if the information collected does not influence the recommendation. The purpose of the client information is to allow the adviser or portfolio manager to make a reasoned decision about what is appropriate.

Quality matters as well as volume. An answer that is internally inconsistent, out of date or clearly incomplete should be explored rather than accepted because the form is technically complete. The file should make clear where significant facts came from and how uncertainties were resolved.

The depth should reflect the service. A complex pension transfer or concentrated high-risk investment can require more analysis than a straightforward diversified investment for an experienced client, while discretionary management needs enough information to establish and maintain a suitable mandate.

Investment objectives should be specific enough to shape the portfolio

Objectives such as capital growth, income or preservation are often too broad on their own. The adviser should understand time horizon, liquidity needs, expected withdrawals, tax or planning context where relevant and any constraints that materially affect the recommendation.

Risk tolerance forms part of the objective assessment under COBS 9A, but it should not be treated as a standalone psychometric result. The customer may express willingness to accept volatility that is inconsistent with the consequences of loss or the time available to recover.

The file should therefore connect the stated objective with the portfolio or product. If a client needs access to a large part of the capital within two years, that fact should be visible in the investment reasoning rather than buried in a fact-find while the recommendation assumes a long-term horizon.

Where several objectives compete, the adviser should explain the priority and trade-off. Suitability is stronger when another competent reviewer can see why the chosen approach reflects the client's real circumstances rather than the firm's default proposition.

Capacity for loss is different from willingness to take risk

A client can be willing to accept investment risk but unable to withstand a material loss without damaging their financial objectives or standard of living. The suitability process should therefore distinguish risk tolerance from financial capacity where the applicable rules require the firm's assessment to cover ability to bear losses.

This is especially important for clients drawing income, investing retirement capital or relying on the portfolio for a foreseeable expenditure need. A high risk score should not override a financial position that makes the consequences of loss unacceptable.

The assessment should be evidenced rather than asserted. Cash reserves, income needs, liabilities, other assets, expected withdrawals and the client's reliance on the portfolio can each affect the analysis.

The adviser should also consider whether the recommendation changes the client's capacity for loss. Moving a large proportion of liquid assets into a volatile investment can alter the resilience that existed before the transaction.

Knowledge and experience should relate to the investment being considered

COBS 9A requires information about the client's knowledge and experience relevant to the specific type of product or service. A customer can be sophisticated in one area and inexperienced in another.

The assessment should therefore avoid broad labels such as experienced investor without supporting detail. The firm should understand the types of investments the client has used, the nature and frequency of previous transactions and relevant professional or educational background where the rules make those factors material.

Complex or illiquid investments deserve particular care. Familiarity with listed funds does not automatically demonstrate understanding of structured products, private markets or leveraged strategies.

Where the client does not have sufficient understanding for the proposed strategy, the firm should not use disclosure as a substitute for suitability. The advice process exists to determine whether the recommendation is appropriate for that client, not to transfer the risk back to them through a warning.

Suitability applies to portfolio decisions as well as initial recommendations

COBS 9A suitability is relevant not only to a recommendation to buy. The rules expressly apply to decisions to buy, hold or sell investments within portfolio management and to the investment service or transaction more broadly.

Discretionary managers should therefore be able to demonstrate that the mandate and portfolio remain suitable as client circumstances, markets and the portfolio itself change. The control is not satisfied by a robust onboarding assessment followed by years of portfolio activity disconnected from the client's current position.

Mandate limits, risk bands and investment restrictions should be operational. Breaches and exceptions need escalation, and material changes in client circumstances should be capable of reaching the portfolio process.

Model portfolios can add complexity because the investment decision may be made at model level while suitability remains client-specific at the adviser or discretionary relationship level. Firms need clear responsibilities and information flow so model change does not detach the portfolio from the individual client's mandate.

The suitability report should explain the reasoning, not reproduce the fact-find

Where the rules require a suitability report, the client should receive a clear explanation of the advice and why it is suitable. The report should not become a generic output that repeats personal data without showing the judgement linking the facts to the recommendation.

Material disadvantages and trade-offs should be visible. If the recommended strategy costs more than an alternative, reduces liquidity or creates a different risk profile, the explanation should address why those features remain appropriate.

The language should be understandable to the customer. Technical terms can be necessary, but the FCA's 2026 Consumer Investments priorities puts clear, jargon-free communication at the centre of building a stronger investment culture.

A strong report also helps later QA. The reviewer can compare the stated rationale with the fact-find and underlying analysis rather than reconstruct the recommendation from several disconnected documents.

Ongoing suitability requires both a rule analysis and a service-delivery analysis

Where a firm provides periodic suitability assessment under the current COBS 9A provisions, the rules include at least annual assessment requirements in the circumstances to which those provisions apply, with increased frequency depending on factors such as client and investment risk. Firms should not generalise that rule beyond its actual scope or assume every ongoing wealth service is governed identically.

Separately, the firm must deliver the ongoing service the client has contracted and paid for. The FCA's 2025 ongoing advice review focused on whether financial advisers were providing the promised service, which is a Consumer Duty and contractual issue even where the detailed suitability timetable varies by service.

The control should therefore distinguish regulatory periodic suitability, contractual reviews and other ongoing service elements. The client agreement, workflow and MI should describe the same proposition.

Where a client does not engage, the firm should have a controlled process. It should know what attempts are made, whether suitability can still be assessed, whether the service can continue and what happens to ongoing fees if the promised service cannot be delivered.

Records should allow another competent reviewer to reconstruct the judgement

Suitability records should show the client information used, the recommendation or portfolio decision and the reasoning supporting it. A later reviewer should not need the original adviser's memory to understand why the decision was made.

This means firms should preserve material research, risk and capacity assessments, cost comparisons, alternative analysis and client communications where these support the conclusion. A system-generated recommendation with no visible judgement can be difficult to defend when the input data or product set changes.

Historic versions matter in ongoing relationships. The firm should be able to identify which client circumstances, product information and portfolio model applied at the time of a particular recommendation or review.

Good records also improve complaints handling. Where a customer challenges an investment outcome years later, the firm can distinguish foreseeable investment loss from advice that was unsuitable based on information available at the time.

File review should test reasoning and recurring weaknesses

Suitability QA should assess whether the adviser obtained relevant information, resolved inconsistencies, considered material alternatives and explained why the recommendation was suitable. A document-presence checklist is not enough.

Sampling should reflect risk. Complex investments, high withdrawals, vulnerable clients, replacement business, unusual fees, concentrated portfolios, complaints and advisers with previous findings can justify deeper review.

The firm should also calibrate reviewers. Different compliance staff should reach broadly consistent conclusions from the same evidence, particularly where the organisation uses several teams or outsourced file reviewers.

Repeated findings should trigger root-cause analysis. If several advisers fail to document capacity for loss properly, the issue may sit in the fact-find, training or advice system rather than individual competence alone.

CP26/10 is proposed reform, not the current rulebook

The FCA published CP26/10 in March 2026 proposing to simplify pensions and investment advice rules, including consolidating COBS 9 and 9A and changing aspects of ongoing suitability. The consultation is relevant to firms planning future advice propositions.

As at August 2026, those proposals should not be implemented as though they are final rules. Firms should maintain compliance with the current chapters and use regulatory change management to assess what would need to change if the FCA later confirms the proposals.

This distinction is important for ongoing services. The consultation proposes replacing the current annual suitability requirement in relevant MiFID and IDD ongoing services with a more flexible approach. That does not remove today's requirement before final rules take effect.

A firm can prepare operationally by mapping affected procedures, client agreements and systems without weakening the live control environment.

How Regulatory Counsel can support

Regulatory Counsel supports investment advisers and wealth managers with COBS suitability reviews, advice file QA, discretionary mandate testing, ongoing-service controls, Consumer Duty and remediation.

We can review individual higher-risk files, a representative adviser sample or the design and effectiveness of the firm's overall suitability framework.

We advise investment and wealth firms on suitability file testing as part of a wider compliance audit, or as a continuing workstream within day to day compliance support.

Speak to Regulatory Counsel to discuss an investment suitability review.