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Financial Advisory × Compliance — United Kingdom · published 2026-05-26 · methodology v2.1

Retail customer definition — micro-enterprises and charities

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

3. 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 on this question. One substituted "annual income" for "annual turnover" as the charity threshold measure, while another correctly identified micro-enterprises and small charities as retail customers but omitted the specific £1 million annual turnover threshold for charities and failed to note that the definition varies by sourcebook.
  • 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: AI tools treated "annual income" and "annual turnover" as interchangeable, which they are not for charities as a matter of accounting and regulatory classification. Separately, where one AI tool described the definition correctly in broad terms, it omitted the £1 million threshold that determines which charities fall within scope — the specific figure a Compliance team would need to apply the rule in practice.
  • 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 scope analysis or client-classification procedure built on the AI's description of the retail customer definition may incorrectly exclude charities that fall within the £1 million annual turnover threshold (if the firm uses the wrong measure) or fail to flag the sourcebook variation (leading to inconsistent application across different business lines). For a Financial Advisory firm with charity clients near the threshold, misclassifying a retail customer as a professional client removes the full Consumer Duty protection — a position the FCA can challenge in a supervisory review and that may require retrospective remediation of the services provided to that client.

References — raw findings (per AI model)
This finding also affects
← Previous finding Finding 2. Foreseeable harm carve-out — the "reasonably believes" qualifier Next finding → Finding 4. Consumer testing of communications — rule versus 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). "Retail customer definition — micro-enterprises and charities — Financial Advisory × Compliance — United Kingdom." Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005. RegLegBrief AI Hallucination Research, published 2026-05-26. https://reglegbrief.com/audiences/sectors/gb/financial_advisory/compliance/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/
APA 7th edition 
RegLeg Specialist Panel. (2026). 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/sectors/gb/financial_advisory/compliance/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/
Bluebook / OSCOLA (US + UK legal) 
RegLeg Specialist Panel, 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/sectors/gb/financial_advisory/compliance/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     = {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/sectors/gb/financial_advisory/compliance/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/}
}
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