COBS 9 — Suitability (designated investment business)

Category: Compliance & AML · Reviewed by Chrissie Anderson, Client Executive · Last reviewed June 2026

Definition

COBS 9 (and the MiFID-derived COBS 9A) sets out the suitability rules for designated investment business. The firm must take reasonable steps to ensure that a personal recommendation, or a decision to trade for the client, is suitable. Suitability is assessed against the client’s knowledge and experience, financial situation (including ability to bear loss), and investment objectives (including risk tolerance).

Legal / Regulatory basis

FCA Handbook, COBS 9 and COBS 9A. Made under FSMA sections 137A and 138, implementing UK retained MiFID II Article 25(2) (suitability) and the FCA’s own rules for non-MiFID investment business.

How it works in practice

The firm conducts a fact-find covering the client’s circumstances and objectives, produces a Suitability Report explaining the recommendation, retains records, and (under the Consumer Duty) considers whether the recommendation supports good outcomes. For ongoing relationships (e.g. discretionary management) the suitability assessment must be kept up to date and a periodic review provided.

Common variations

For pure insurance distribution the equivalent rules are ICOBS 5 (demands and needs) and, where personal recommendation is given, the personal recommendation rules in ICOBS 5.3. The suitability standard is different — ICOBS uses “demands and needs” rather than COBS suitability.

Example

An insurance broker placing a commercial property risk is not in COBS 9 territory — it follows ICOBS 5. A financial adviser recommending a Self-Invested Personal Pension transfer is squarely in COBS 9 (and COBS 19 for the transfer specifics).

See also

• COBS — Conduct of Business Sourcebook
• ICOBS 5 — Identifying client needs and advising
• COBS 19 — Pension transfers, conversions and opt-outs
• PRIN 2A — The Consumer Duty

References

FCA Handbook, COBS 9 and COBS 9A. Financial Services and Markets Act 2000, sections 137A and 138. UK retained MiFID II (Directive 2014/65/EU), Article 25(2). Commission Delegated Regulation (EU) 2017/565, Articles 54–55.

Last reviewed

By Apex Insurance Brokers on 2026-06-11.

This entry is part of the Apex Insurance Wiki. Last reviewed by Apex Insurance Brokers on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.