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

Scope of "retail customer" — micro-enterprises and small charities under PRIN 2A

RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005
What the RLB Specialist Panel found

3. Scope of "retail customer" — micro-enterprises and small charities under PRIN 2A

  • 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 partially correct answers but each contained a material error. One tool substituted "annual income" for "annual turnover" as the charity threshold measure. Another correctly identified that micro-enterprises and small charities fall within the definition but omitted the specific £1 million annual turnover threshold entirely, and neither tool noted that the definition of "retail customer" varies across FCA sourcebooks.
  • What the regulator actually says: The retail customer definition includes individual consumers, micro-enterprises, and charities with annual turnover less than £1 million. The definition varies by sourcebook.
  • Why the AI went wrong: Turnover and income are distinct accounting concepts, particularly for charitable organisations, and the rule uses turnover specifically. The omission of the threshold — or its substitution with a different measure — and the failure to note that the definition is not uniform across the Handbook leave a lawyer without the precise scoping information needed to give accurate advice.
  • 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

A lawyer scoping the Consumer Duty for a client's charity operations or small-business relationships needs both the correct measure and the correct threshold. AI tools tested here either used the wrong measure for the charity threshold (income instead of turnover) or omitted the threshold entirely, and neither flagged that the definition is not uniform across FCA sourcebooks. For charity clients, this is a material distinction: a charity with annual turnover below £1 million but income above it would be wrongly characterised as outside scope under one AI tool's formulation. Incorrect scoping advice creates the risk that a client builds a compliance programme that does not cover regulated customer relationships, potentially leading to FCA supervisory action once a gap is identified.

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 non-binding guidance?
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 "retail customer" — micro-enterprises and small charities under PRIN 2A — Practitioners — Lawyers." 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/lawyers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/
APA 7th edition 
RegLeg Specialist Panel. (2026). Scope of "retail customer" — micro-enterprises and small charities under PRIN 2A [Hallucination finding RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005]. RegLegBrief AI Hallucination Research. https://reglegbrief.com/audiences/practitioners/gb/lawyers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/
Bluebook / OSCOLA (US + UK legal) 
RegLeg Specialist Panel, Scope of "retail customer" — micro-enterprises and small charities under PRIN 2A [RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005], RegLegBrief AI Hallucination Research (May 26, 2026), https://reglegbrief.com/audiences/practitioners/gb/lawyers/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 "retail customer" — micro-enterprises and small charities under PRIN 2A},
  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/lawyers/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/}
}
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