Can an IFA use AI to write suitability reports without breaching Consumer Duty?

Every adviser has now been shown the same demo. A fact-find goes in, a suitability report comes out, and the room does the arithmetic on paraplanner hours.

The figure usually quoted is four to six hours per report. It comes from vendors selling suitability report generators: it is a vendor claim, not independent research, and we could find no regulator or trade body figure to corroborate it. Treat it as the seller’s number. It is still probably the right order of magnitude, which is exactly why the question deserves a serious answer rather than a demo.

What is the actual regulatory risk?

Not that a model writes badly. Models write fluently, which is the problem.

A suitability report is a record of a decision. Consumer Duty asks you to evidence that the outcome was good for the client. If the reasoning in the file was generated rather than reasoned, and nobody can now say which parts the adviser actually held a view on, you do not have an evidence problem in the future: you have one already.

What has to be true before it is defensible?

1. The adviser signs, and the file shows they changed something

A file where every AI draft went out untouched is a file that says nobody read them. Keep the diff between draft and sent. It is the cheapest possible evidence that a human was in the loop, and it costs nothing to retain.

2. Every source is retrievable

If the report says the fund’s ongoing charge is 0.62%, you need to be able to produce the document that said so, on the date it said it. A draft that cannot show its working is a liability wearing the clothes of an efficiency.

3. Client data stays inside controls you can evidence

This is a data protection question before it is an FCA one. Where does the fact-find go, who processes it, where is it stored, for how long, and can you show that to a client who asks? “It goes to a model” is not an answer to any of those.

4. The failure mode is visible, not silent

The dangerous output is not the one that breaks. It is the one that reads perfectly and is wrong about one number. Your check has to be on the facts, not on the prose, because the prose will always be fine.

What does a sensible first step look like?

Not the whole report. Take the section that is genuinely clerical and has a checkable output (the factual summary of current arrangements) and automate only that. It is the part with the most re-keying and the least judgement.

Is anyone actually being fined for this?

Not that we can find, and we looked. That is not reassurance: it is early. The absence of enforcement in a new practice tells you the sample is small, not that the practice is safe.

The defensible position is the boring one: use it where the work is clerical, keep the human decision explicit, keep the trail, and be able to explain the setup in one page to someone who is not technical. If you cannot write that page, you are not ready to use it on client files.

What this does not tell you

Whether a particular setup is compliant. The FCA has published no rule specific to AI-drafted suitability reports; the Consumer Duty asks for good outcomes and evidence of them, so the four conditions above are what we think makes a file defensible, not a regulatory checklist. We are not lawyers or compliance consultants, and a firm with a live question should put it to one.

Nor does it rest on any enforcement case. We found none about AI-drafted advice specifically, and the vendor figure in the sources is marked uncorroborated because nobody else has reproduced it.