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

Consumer Duty scope exclusions — reinsurance, group insurance, and large commercial risks

RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q018
What the RLB Specialist Panel found

9. Consumer Duty scope exclusions — reinsurance, group insurance, and large commercial risks

  • Question (paraphrased to protect IP): Does the Consumer Duty apply to reinsurance companies, group insurance policy distribution, or large-risk commercial contracts?
  • 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 the Consumer Duty can apply to group insurance distribution through the distribution chain where group policy beneficiaries are retail customers, and that firms manufacturing or distributing policies where individual retail beneficiaries are protected fall within scope where they materially influence retail outcomes.
  • What the regulator actually says: The Consumer Duty does not apply to reinsurance, contracts of large risk sold to commercial customers where the risk is located outside the UK, nor to activities connected to the distribution of group insurance policies or the extension of these policies to new members.
  • Why the AI went wrong: The AI's answer on group insurance is a direct contradiction of the rule as written. PS22/9 explicitly excludes activities connected to the distribution of group insurance policies and the extension of those policies to new members — the AI instead asserted that such distribution can fall within scope where retail beneficiaries are involved. A Financial Adviser advising a firm that distributes group insurance policies would receive completely wrong guidance about their Consumer Duty obligations.
  • 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
Impact for this audience

This is among the highest-risk findings in this case study. A Financial Adviser who is told that the Consumer Duty can apply to group insurance distribution where retail beneficiaries are involved — and who passes that advice to a client — may cause the client to incur significant compliance costs building a Consumer Duty framework for activities that are explicitly excluded under PS22/9. The FCA's exclusion of group insurance distribution is clear and specific; the AI's answer is its direct opposite. If the client relies on the adviser's advice and applies Consumer Duty obligations to an excluded activity, they also risk confusing their regulatory position in any subsequent supervisory dialogue.

References — raw findings (per AI model)
This finding also affects
← Previous finding Finding 8. Differences between the Consumer Duty consultation draft (CP21/36) and the final rules (PS22/9) Next finding → Finding 10. Which pre-Consumer Duty Dear CEO letters remain live supervisory expectations?
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). "Consumer Duty scope exclusions — reinsurance, group insurance, and large commercial risks — Practitioners — Financial Advisers." Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q018. 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-v1-018/
APA 7th edition 
RegLeg Specialist Panel. (2026). Consumer Duty scope exclusions — reinsurance, group insurance, and large commercial risks [Hallucination finding RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q018]. RegLegBrief AI Hallucination Research. https://reglegbrief.com/audiences/practitioners/gb/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-018/
Bluebook / OSCOLA (US + UK legal) 
RegLeg Specialist Panel, Consumer Duty scope exclusions — reinsurance, group insurance, and large commercial risks [RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q018], RegLegBrief AI Hallucination Research (May 26, 2026), https://reglegbrief.com/audiences/practitioners/gb/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-018/.
BibTeX 
@misc{reglegbrief_RLB_F_GB_FCA_CONSUMER_DUTY_PS22_9_Q018,
  author    = {RegLeg Specialist Panel},
  title     = {Consumer Duty scope exclusions — reinsurance, group insurance, and large commercial risks},
  year      = {2026},
  publisher = {RegLegBrief AI Hallucination Research},
  note      = {Hallucination finding Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q018},
  url       = {https://reglegbrief.com/audiences/practitioners/gb/financial-advisers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-018/}
}
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