Practitioners — Financial Advisers · Last updated 26 May 2026 · methodology v2.1 · Hallucination Register

Scope of the retail customer definition — micro-enterprises and charities

RLB Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005

What the RLB Specialist Panel found

3. Scope of the retail customer definition — micro-enterprises and charities

Question (paraphrased to protect IP): Does the Consumer Duty apply to micro-enterprises or small charities? Are they 'retail customers' under PRIN 2A?
Source regulation: Consumer Duty (PS22/9 + PRIN 2A), Financial Conduct Authority (Regulator portal: https://www.fca.org.uk)
What AI assistants typically say: Multiple AI tools gave similar incorrect responses. One substituted "annual income" for "annual turnover" as the charity threshold qualifier, while another correctly identified that micro-enterprises and small charities fall within the retail customer definition but omitted the specific £1 million annual turnover threshold for charities entirely. Neither AI flagged that the definition varies by sourcebook.
What the regulator actually says: The retail customer definition includes consumers (individual persons), micro-enterprises, and charities with annual turnover less than £1 million. The definition varies by sourcebook.
Why the AI went wrong: One AI tool confused two distinct accounting measures — annual income and annual turnover are not equivalent concepts for charities, and the FCA's definition uses turnover specifically. The other AI omitted the qualifying threshold altogether, leaving a practitioner unable to apply the test in practice. Both tools also failed to signal the sourcebook variation, which is a material practical qualifier.
Cited source(s):
https://handbook.fca.org.uk/handbook/PRIN/2A/1.html — Pretextual
https://www.fca.org.uk/publication/finalised-guidance/fg22-5.pdf — Pretextual
https://handbook.fca.org.uk/handbook/PRIN/2A/5.html — Pretextual
https://handbook.fca.org.uk/handbook/prin2a — Pretextual

Impact for Financial Advisers in the United Kingdom advising on the Consumer Duty (PS22/9 + PRIN 2A)

Financial Advisers regularly need to determine whether a particular client entity qualifies as a retail customer for Consumer Duty purposes, particularly for business clients at the smaller end of the market. A charity client incorrectly assessed as outside the retail customer definition because the adviser used the wrong threshold measure (income rather than turnover) loses the protections the Duty affords — and the adviser risks a regulatory breach for having applied the framework incorrectly.

The sourcebook variation qualifier also matters: an adviser working across multiple product areas may be applying an incorrect definition in one or more of them without realising the threshold differs by context.

← Previous finding Foreseeable harm and customer-accepted risk under the Consumer Duty Next finding → Consumer testing of communications — mandatory rule or guidance recommendation?

Cite this finding

Each finding has a stable Citation ID (RLB-F-… for aggregated case-study findings, RLB-H-… for raw per-model hallucinations) — like a DOI, the ID always resolves to the canonical finding even if URLs change.

RLB Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005

Plain text Download

RegLeg Specialist Panel (2026). "Scope of the retail customer definition — micro-enterprises and charities — Practitioners — Financial Advisers." Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005. RegLegBrief AI Hallucination Research, published 2026-05-26. https://reglegbrief.com/regulators/j3/GB/FCA/CONSUMER-DUTY-PS22-9/practitioners/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/

APA 7th edition Download

RegLeg Specialist Panel. (2026). Scope of the retail customer definition — micro-enterprises and charities [Hallucination finding RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005]. RegLegBrief AI Hallucination Research. https://reglegbrief.com/regulators/j3/GB/FCA/CONSUMER-DUTY-PS22-9/practitioners/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/

Bluebook / OSCOLA (US + UK legal) Download

RegLeg Specialist Panel, Scope of the retail customer definition — micro-enterprises and charities [RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005], RegLegBrief AI Hallucination Research (May 26, 2026), https://reglegbrief.com/regulators/j3/GB/FCA/CONSUMER-DUTY-PS22-9/practitioners/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/.

BibTeX Download

@misc{reglegbrief_RLB_F_GB_FCA_CONSUMER_DUTY_PS22_9_Q005,
  author    = {RegLeg Specialist Panel},
  title     = {Scope of the retail customer definition — micro-enterprises and charities},
  year      = {2026},
  publisher = {RegLegBrief AI Hallucination Research},
  note      = {Hallucination finding Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005},
  url       = {https://reglegbrief.com/regulators/j3/GB/FCA/CONSUMER-DUTY-PS22-9/practitioners/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/}
}

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