Financial Advisory × Legal — United Kingdom · published 2026-05-28 · methodology v2.1

Charity threshold definition under Consumer Duty scope

RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005

What the RLB Specialist Panel found

1. Charity threshold definition under Consumer Duty scope

Question (paraphrased to protect IP): Does the Consumer Duty apply to micro-enterprises and small charities, and on what basis are charities treated as '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: AI tools correctly identify that the Consumer Duty extends to micro-enterprises and to small charities, but substitute "annual income" for the legally defined threshold term when describing the qualifying threshold for charities under PRIN 2A.
What the regulator actually says: Under PRIN 2A, 'retail customer' includes consumers (individual persons), micro-enterprises, and charities with annual turnover less than £1 million.
Why the AI went wrong: AI tools appear to have conflated two distinct financial concepts — "annual income" (commonly used in charity accounting) and "annual turnover" (the defined regulatory term in PRIN 2A) — producing an answer that is directionally correct but legally imprecise in a way that could affect threshold determinations for borderline cases.
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

A Financial Advisory firm's Legal team that uses AI output on the charity threshold question to define internal scope policy risks classifying borderline charity clients under the wrong test. 'Annual income' and 'annual turnover' can produce different results for charities that carry restricted funds, endowments, or investment returns — meaning a firm using the wrong metric may incorrectly exclude clients from Consumer Duty protections. If the FCA reviews the firm's Consumer Duty implementation and finds that scope determinations were made on a legally incorrect basis, the firm faces potential remediation obligations, client redress requirements, and reputational exposure. The FCA's powers under the Consumer Duty include financial penalties and public censure, and implementation failures at the scope-definition level would be difficult to characterise as inadvertent.

References — raw findings (per AI model)

RLB-H-GB-FCA-CONSUMER-DUTY-PS22-9-Q005-Opus47 Claude Opus 4.7 (web search on)
RLB-H-GB-FCA-CONSUMER-DUTY-PS22-9-Q005-Sonnet46 Claude Sonnet 4.6 (web search on)

This finding also affects

Next finding → Finding 2. Changes between CP21/36 consultation and PS22/9 final rules

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). "Charity threshold definition under Consumer Duty scope — Financial Advisory × Legal — United Kingdom." Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005. RegLegBrief AI Hallucination Research, published 2026-05-28. https://reglegbrief.com/audiences/sectors/gb/financial_advisory/legal/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/

APA 7th edition

RegLeg Specialist Panel. (2026). Charity threshold definition under Consumer Duty scope [Hallucination finding RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005]. RegLegBrief AI Hallucination Research. https://reglegbrief.com/audiences/sectors/gb/financial_advisory/legal/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/

Bluebook / OSCOLA (US + UK legal)

RegLeg Specialist Panel, Charity threshold definition under Consumer Duty scope [RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q005], RegLegBrief AI Hallucination Research (May 28, 2026), https://reglegbrief.com/audiences/sectors/gb/financial_advisory/legal/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     = {Charity threshold definition under Consumer Duty scope},
  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/legal/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/}
}

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