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Practitioners — Lawyers · published 2026-05-26 · methodology v2.1

Foreseeable harm and customer-accepted risk under the Consumer Duty

RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003
What the RLB Specialist Panel found

2. Foreseeable harm and customer-accepted risk under the Consumer Duty

  • Question (paraphrased to protect IP): Does the Consumer Duty require firms to prevent all foreseeable harm to retail customers? What is the position where a customer understands and accepts a risk?
  • Source regulation: Consumer Duty (PS22/9 + PRIN 2A), Financial Conduct Authority (Regulator portal: https://www.fca.org.uk)
  • What AI assistants typically say: The AI described a position in which a firm avoids a breach only if it has acted in good faith, supported the customer's understanding, avoided harm caused by its own conduct, and the customer accepts the risk. This formulation drops the rule's actual trigger — the firm's reasonable belief — and replaces it with a multi-condition test that imposes substantially heavier obligations than the rule requires.
  • What the regulator actually says: Where a firm reasonably believes a retail customer understands and accepts such risks, it will not breach the rule if it fails to prevent them.
  • Why the AI went wrong: The AI substituted its own elaborated standard for the rule's single qualifying condition, adding three requirements that are not part of this specific provision. The resulting formulation is more burdensome and legally inaccurate, and would lead a firm advised on this basis to misunderstand both where its liability ends and the precise standard against which the FCA would assess its conduct.
  • Cited source(s):
  • https://handbook.fca.org.uk/handbook/PRIN/2A/2.html — Pretextual
  • https://www.fca.org.uk/publication/finalised-guidance/fg22-5.pdf — Pretextual
Impact for this audience

A lawyer advising a financial services firm on when it may lawfully decline to prevent a customer harm — for example, in product design or distribution advice — needs the precise legal test. The actual test is whether the firm reasonably believes the customer understands and accepts the risk. AI tools tested here substituted a multi-condition test that adds obligations the rule does not impose, meaning a firm advised on this basis would misunderstand where its liability ends and the standard against which the FCA would assess its conduct. If a firm's Consumer Duty policies or adviser instructions are built around the wrong legal standard, the lawyer's firm faces professional indemnity exposure and the regulated firm client faces enforcement risk.

References — raw findings (per AI model)
This finding also affects
← Previous finding Finding 1. Legal basis of the Consumer Duty and the role of FSMA 2023 Next finding → Finding 3. Scope of "retail customer" — micro-enterprises and small charities under PRIN 2A
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.

Plain text 
RegLeg Specialist Panel (2026). "Foreseeable harm and customer-accepted risk under the Consumer Duty — Practitioners — Lawyers." Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003. RegLegBrief AI Hallucination Research, published 2026-05-26. https://reglegbrief.com/audiences/practitioners/GB/lawyers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-003/
APA 7th edition 
RegLeg Specialist Panel. (2026). Foreseeable harm and customer-accepted risk under the Consumer Duty [Hallucination finding RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003]. RegLegBrief AI Hallucination Research. https://reglegbrief.com/audiences/practitioners/GB/lawyers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-003/
Bluebook / OSCOLA (US + UK legal) 
RegLeg Specialist Panel, Foreseeable harm and customer-accepted risk under the Consumer Duty [RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003], RegLegBrief AI Hallucination Research (May 26, 2026), https://reglegbrief.com/audiences/practitioners/GB/lawyers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-003/.
BibTeX 
@misc{reglegbrief_RLB_F_GB_FCA_CONSUMER_DUTY_PS22_9_Q003,
  author    = {RegLeg Specialist Panel},
  title     = {Foreseeable harm and customer-accepted risk under the Consumer Duty},
  year      = {2026},
  publisher = {RegLegBrief AI Hallucination Research},
  note      = {Hallucination finding Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003},
  url       = {https://reglegbrief.com/audiences/practitioners/GB/lawyers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-003/}
}
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