7.4 Recommendations, Conclusions and Insistent Clients

After analysis, the adviser presents a personal recommendation to the client. COBS 9.4 sets out what must be in the suitability report, the FCA's insistent-client guidance and COBS 9A.5A set out what happens when the client wants something different, and execution-only is a separate route that does not engage the suitability rules at all.

Structure of a Recommendation

A well-structured recommendation tells the client:

1. What is being recommended (the product, provider and amount).
2. Why it is suitable (matched to objectives, risk profile and circumstances).
3. How it works (key features, charges, term, risks).
4. What alternatives were considered and why they were not recommended.
5. What the disadvantages are.
6. What happens next (implementation, ongoing service, cancellation rights).

The recommendation should be in plain English, in the client's own words where objectives are restated, and free of jargon. Generic statements such as "this meets your attitude to risk" are not acceptable — the report must explain how it meets the ATR and CFL.

The Suitability Statement

Under COBS 9.4.7R, the suitability report (sometimes called the suitability statement) must specify:

• The client's demands and needs.
• Why the firm has concluded that the recommendation is suitable for the client.
• Any possible disadvantages for the client of the recommendation.

For a pension transfer, conversion or opt-out, additional content is required (see COBS 19.1), and the report must be issued before the transaction is carried out.

The Consumer Duty adds an outcomes focus: the report should not merely describe the recommendation but enable the client to understand and act on it. A suitability report that is technically complete but incomprehensible to the client is a Consumer Duty failing as well as a TCF failing.

Key Features Document

nThe key features document is a product-level disclosure required under COBS 5 (for non-MiID investments) and equivalent rules for pensions and life policies. It must be provided in good time before the client commits and must include:

• The product's purpose and how it works.
• The main benefits and risks.
• The charges (initial and ongoing) and how they are taken.
• Cancellation and cooling-off rights.
• Tax treatment assumptions.
• Performance scenarios or projections where required.

The adviser must confirm the client has received and understood the key features document; relying on the client to read it later is not enough.

Reasons Why Not

Where the adviser recommends one solution, the report should explain — in plain English — why other reasonable alternatives were not recommended. This is the "reasons why not" content. It helps the client understand the trade-off they are making and is good evidence that the adviser considered the client's circumstances rather than defaulting to a preferred product.

The Insistent Client

An insistent client is defined in COBS 9A.5A as a client who:

1. Has received a personal recommendation from the firm.
2. Decides to enter into a transaction different from that recommended.
3. Wants the firm to facilitate that transaction.

The FCA Handbook has no specific rule forcing an adviser to act for an insistent client. A firm may decline. However, where it agrees to facilitate the client's chosen transaction, COBS 9A.5A guidance sets out how to comply with the underlying obligations under the Principles, the client's best interests rule (COBS 2.1.1R), the fair, clear and not misleading rule (COBS 4.2.1R), the suitability rules (COBS 9/9A) and record-keeping rules.

Three Key Steps for an Insistent Client

The FCA's published guidance identifies three steps:

Step 1 — Follow the normal advice rules first

The adviser must still:

• Carry out a full fact-find (COBS 9.2).
• Ascertain the client's actual investment objectives (a request for a particular solution is not an objective).
• Make a personal recommendation that is suitable.
• Provide a suitability report.

The advice process is not bypassed because the client wants to insist.

Step 2 — Document the divergence in a separate document

A separate document (not the suitability report) should record:

• The personal recommendation the firm made.
• The client's chosen transaction.
• The reasons why the transaction is not in accordance with the recommendation.
• The risks of the transaction proposed by the client.
• The reasons why the firm did not recommend that transaction to the client.

Robust warnings should be given and documented. The separate document should not attempt to justify the client's choice as if it were advice — it should record the firm's advice and the client's insistence against it.

Step 3 — Obtain a written acknowledgement from the client

nThe firm should obtain from the client an acknowledgement that:

• The transaction is not in accordance with the firm's personal recommendation.
• The transaction is being carried out at the request of the client.

Where possible, the acknowledgement should be in the client's own words, not a pre-printed tick-box. The adviser should keep both the suitability report and the insistent-client acknowledgement on file.

Insistent Client vs Execution-Only

These two routes are often confused. They are not the same.

Execution-only is a service where the client initiates a transaction without any personal recommendation. Under COBS the firm must not recommend the product and must take reasonable steps to ensure the client understands the risks. An insistent-client route cannot be used to dress up what is really execution-only as if it were advised — the FCA has flagged this as poor practice.

Documented Authority Required

For an insistent-client transaction the firm should hold on file:

• The completed fact-find.
• The suitability report (with the firm's personal recommendation).
• The separate insistent-client document setting out the risks and reasons.
• The client's written acknowledgement in their own words where possible.
• Any additional warnings given (e.g. for pension safeguarded benefits, where the client must have received appropriate pension advice from a qualified adviser if the transfer value is £30,000 or more).

Without this documented authority, the firm has no defence if the client later complains that they did not understand the risks.

Communicating the Recommendation to the Client

A recommendation is only effective if the client understands it. Practical steps:

• Walk the client through the suitability report in the meeting, not just send it afterwards.
• Use the client's own language when restating their objectives.
• Check understanding by asking the client to summarise the recommendation back.
• Confirm key risks and disadvantages explicitly.
• Signpost cancellation rights and the firm's complaints procedure.
• Provide the report in an accessible format (large print, audio, translation) where the client needs it.

Common Recommendations Pitfalls

• Boilerplate suitability reports: templates that restate the rules rather than the client's actual circumstances.
• Missing disadvantages: only positive features are mentioned.
• No reasons why not: alternatives are not addressed, so the client cannot judge the trade-off.
• Confusing insistent-client and execution-only: trying to use one to avoid the obligations of the other.
• Inadequate vulnerability adjustments: failing to confirm the client understood the recommendation.

Closing the Advice Process

The advice process closes when:

• The client accepts the recommendation and the transaction is implemented, or
• The client insists on a different transaction and the insistent-client procedure is followed, or
• The client declines to proceed (in which case records need not be retained under COBS 9.5, but good practice is to keep them), or
• The firm decides it cannot recommend and no transaction is facilitated.

Whichever route is taken, the file should allow a third party — the FCA, the Financial Ombudsman Service, or a successor adviser — to understand what was recommended, why, and what the client agreed to.