AI Hallucination Research › Audiences › Practitioners › United Kingdom › Financial Advisers › Detail › Finding
Practitioners — Financial Advisers · published 2026-05-26 · methodology v2.1

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

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 this audience

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.

References — raw findings (per AI model)
This finding also affects
← Previous finding Finding 2. Foreseeable harm and customer-accepted risk under the Consumer Duty Next finding → Finding 4. 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.

Plain text 
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/audiences/practitioners/gb/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/
APA 7th edition 
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/audiences/practitioners/gb/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/
Bluebook / OSCOLA (US + UK legal) 
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/audiences/practitioners/gb/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/.
BibTeX 
@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/audiences/practitioners/gb/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/}
}
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