Practitioners — Stockbrokers / Trading Reps · published 2026-05-28 · 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

1. 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, and what is the effect of a retail customer knowingly accepting 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 assistants described a multi-condition test under which a firm avoids breaching the Duty only if it acted in good faith, actively supported the customer's understanding, avoided any foreseeable harm caused by its own conduct, and otherwise complied with the Duty in full — all in addition to the customer accepting the risk. This framing presents a compound checklist that does not appear in the rule text.
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 drew on the broader principles of the Consumer Duty framework and folded them into the answer for this specific rule, replacing the single regulatory qualifier — the firm's reasonable belief — with a multi-limbed test that reflects the overall Duty's ethos rather than the provision's actual wording. The result is a plausible-sounding but substantively incorrect standard.
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 stockbroker or trading representative who relies on the AI's multi-condition test when designing execution-only processes or documenting client risk acceptance may structure their firm's conduct records around a standard the FCA never imposed. If the FCA subsequently reviews the firm's Consumer Duty compliance — whether through a supervisory visit, a thematic review, or in response to a complaint — and finds that the firm's documented procedures were calibrated to a fabricated legal test rather than the actual rule, the firm faces potential enforcement action including financial penalties and public censure under the FCA's existing Consumer Duty powers. For the practitioner's retail clients, the more immediate consequence is that a firm applying a non-existent higher standard may, paradoxically, fail to engage the actual rule at the right moment — leaving clients who genuinely accepted informed risks without the protection the real standard was designed to provide.

References — raw findings (per AI model)

RLB-H-GB-FCA-CONSUMER-DUTY-PS22-9-Q003-Opus47 Claude Opus 4.7 (web search on)

This finding also affects

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 — Stockbrokers / Trading Reps." Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003. RegLegBrief AI Hallucination Research, published 2026-05-28. https://reglegbrief.com/audiences/practitioners/gb/stockbrokers-trading-reps/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/stockbrokers-trading-reps/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 28, 2026), https://reglegbrief.com/audiences/practitioners/gb/stockbrokers-trading-reps/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/stockbrokers-trading-reps/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-003/}
}

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