Why Synthetic Data Lessons Apply to Adviser Record-Keeping

In August 2025, the Financial Conduct Authority (FCA) published the final report of the Synthetic Data Expert Group (SDEG). At first glance, its focus on data generation and model testing may feel far removed from the every day work of financial advisers. Yet the themes it sets out around governance, accountability, documentation, and fairness speak directly to the challenges advisers face with record keeping and suitability reports.

The lessons of synthetic data governance are not just for data scientists or banks building complex models. They provide a window into how the regulator expects all firms in financial services to manage data responsibly. For advisers, this has direct implications for compliance, client trust, and the efficiency of their reporting.

What the Synthetic Data Expert Group Did

The SDEG was created in 2023 under the FCA’s Innovation Advisory Group. Its role was to bring together experts from across industry, academia, regulators, and civil society to explore how synthetic data could be generated and used responsibly in financial services. Ultimately, “creating a collaborative framework between the public and private sector.”

Synthetic data, in simple terms, is artificially created data that replicates the statistical properties of real data without exposing private or sensitive information. It allows firms to test models, share data safely, and innovate without the same privacy risks that come with live client data.

Over two years, the group tested use cases, examined risks, and debated how to build trust in synthetic data. This August 2025 report is its second and final publication, focusing on the governance considerations that will determine whether synthetic data is adopted safely and effectively across the sector.

Why the Report Matters for the UK Financial Industry

Although the report is not formal FCA guidance, it carries weight. It highlights what the regulator sees as necessary for building confidence in new technologies and, by extension, in the firms that use them.

Three points stand out:

• The FCA is signalling that synthetic data and related technologies are central to its five-year strategy for financial innovation.
• It is clear that governance, not just technology, will be the regulator’s main lens for assessing whether innovation is safe, fair, and trustworthy.
• The principles outlined for synthetic data – accountability, transparency, fairness, and continuous monitoring – are the same ones advisers already face in their own compliance obligations.

For the broader industry, this means firms that adopt new technology without strong governance will risk scrutiny. For advisers, it confirms that documentation, suitability, and audit readiness are not optional extras but again, regulatory expectations.

Key Findings of the FCA Report

The SDEG drew together insights from its work into nine key governance principles for synthetic data projects. These principles have relevance far beyond data science:

1. Accountability – Clear responsibility across the lifecycle of data and AI systems.
2. Safety – Reliability, robustness, and accuracy must underpin all models.
3. Transparency – Decision-makers should be able to see how systems work and why.
4. Explainability – Outputs should be understandable and justifiable to humans.
5. Security and Privacy – Systems must protect both data security and individual rights.
6. Fairness – Prevent discriminatory outcomes in decisions and recommendations.
7. Agency – Human operators must be able to question and challenge decisions.
8. Suitability – Use cases must be justified by real needs, not just technical possibility.
9. Continuous Monitoring and Improvement – Models and systems should be regularly assessed to ensure they remain effective and compliant.

The report also stressed:

• Pre-project assessment is essential. Firms must weigh value against risk, consider privacy implications, and align projects with regulatory priorities before starting.
• Documentation is a cornerstone of governance. Every assumption, decision, and trade-off should be recorded to provide an audit trail.
• Bias management is critical. Synthetic data can reduce bias, but if handled poorly it can amplify unfair outcomes.
• Confidence depends on governance, not perfection. Transparency, consistency, and monitoring are more important than flawless models.

What This Means for Financial Advisers

For advisers, the parallels are immediate. Suitability reports are, in effect, the governance framework of advice. They show accountability for recommendations, provide documentation of client circumstances, and act as the audit trail if a regulator reviews a case.

Yet advisers often face gaps in this process. Notes may be fragmented across systems, paraplanners may interpret advice differently, and documentation can feel like an administrative burden. In the same way synthetic data projects falter without governance, adviser record-keeping weakens without structure.

The FCA’s insistence on accountability, fairness, and transparency applies directly to suitability reporting. Advisers must be able to demonstrate not only that advice was suitable, but that the process behind it was fair, unbiased, and properly documented. That is where the governance gap appears: many firms rely on manual processes that struggle to meet this standard consistently.

Looking Ahead to the FCA’s AI Lab and Digital Sandbox

The closure of the Synthetic Data Expert Group does not mark the end of the FCA’s interest in emerging technologies. On the contrary, it feeds into the regulator’s longer-term innovation agenda. The FCA has already made its Digital Sandbox a permanent feature, providing firms with a safe space to test ideas using synthetic data. Alongside this, the FCA’s AI Lab is actively exploring how artificial intelligence can be governed, audited, and explained in ways that protect consumers while allowing the industry to innovate.

For advisers, this matters because it shows the regulator’s trajectory. Synthetic data governance is not an isolated experiment but part of a broader programme to ensure that AI and data-driven tools in financial services operate under clear principles of accountability, transparency, and fairness. The expectations being shaped in these environments today will likely influence how advisory firms are supervised tomorrow.

Automwrite and the Governance Gap

Automwrite was built with these same governance principles in mind. By capturing an adviser’s notes and converting them into a compliant, CIP-aligned suitability report, it directly addresses the issues raised in the FCA’s paper:

• Accountability: Reports are tied directly to adviser input, reducing ambiguity in responsibility.
• Documentation: Every recommendation is documented clearly, creating an auditable record.
• Fairness and Transparency: Reports reflect the adviser’s advice, minimising the risk of bias being introduced through paraphrasing or misinterpretation.
• Continuous Monitoring: Reports can be updated quickly if client circumstances or regulatory expectations change.

Automwrite does not remove the adviser’s judgement or augment it; it strengthens the governance around it. In doing so, it mirrors the FCA’s vision of innovation that is governed responsibly, with trust and compliance at its core.

From Synthetic Data to Smarter Advice

The FCA’s August 2025 report on synthetic data governance may appear focused on the technical side of financial services, but its lessons are directly relevant to financial advisers. Governance is not a barrier to innovation, it is the foundation of trust.

For advisers, this translates into stronger accountability in suitability reports, better documentation of client circumstances, and continuous monitoring of compliance. The principles outlined for synthetic data projects are the same ones advisers should apply to their own record keeping.

Automwrite offers a practical way to close this governance gap. By embedding FCA-aligned principles into the reporting process, it allows advisers to meet regulatory expectations, strengthen client trust, and improve efficiency. Just as the FCA has signalled that the future of innovation depends on governance, the future of advice depends on advisers embracing tools that make governance stronger, not weaker.

If you are ready to strengthen your governance and streamline suitability reports, reach out today to schedule a demo with Automwrite.