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Practitioners — Financial Advisers · 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: AI tools state that where a retail customer understands and accepts a risk, and where the firm has acted in good faith, supported consumer understanding, avoided harm caused by its own conduct, and otherwise complied with the Duty, the customer's acceptance of the risk means the firm will not be in breach.
  • 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 dropped the pivotal "reasonably believes" qualifier — the rule is triggered by the firm's reasonable belief about the customer's understanding, not by objective proof of understanding. In its place, the AI introduced three additional conditions (good faith, supported understanding, avoided own-conduct harm) that the rule does not impose for this specific carve-out. The resulting formulation is more burdensome and legally inaccurate.
  • 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 Financial Adviser advising a client on whether their Consumer Duty obligations are engaged in respect of a customer-accepted risk situation is working directly with the standard the AI misrepresented. The AI's version imposes a multi-part test that the FCA rule does not apply to this specific carve-out, meaning the adviser would tell the client firm it must satisfy conditions (good faith, supported understanding, avoided own-conduct harm) that are not part of the foreseeable harm rule as written. This could lead to unnecessary compliance burden or, more seriously, to a firm believing it has satisfied the standard when it has only met the AI's invented version of it — leaving the actual rule unsatisfied.

References — raw findings (per AI model)
This finding also affects
← Previous finding Finding 1. Legal basis of the Consumer Duty — the role of FSMA 2023 Next finding → Finding 3. Scope of the retail customer definition — micro-enterprises and charities
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 — Financial Advisers." 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/financial-advisers/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/financial-advisers/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/financial-advisers/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/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-003/}
}
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