Retail Banking × Compliance — United Kingdom · published 2026-05-26 · methodology v2.1

Scope of the retail customer definition — micro-enterprises and charities

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

What the RLB Specialist Panel found

3. Scope of the 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. Both correctly identified that micro-enterprises and small charities fall within the definition of "retail customer" under PRIN 2A. However, one AI substituted "annual income" for "annual turnover" as the charity threshold measure, while the other omitted the £1 million annual turnover figure entirely and did not flag that the definition varies by sourcebook.
What the regulator actually says: The FCA definition provides that "retail customer includes consumers (individual persons), micro-enterprises, and charities with annual turnover less than £1 million." The definition also varies by sourcebook, which is a material qualification for firms applying it across different regulatory contexts.
Why the AI went wrong: The substitution of "income" for "turnover" is a meaningful distinction for charities, where the two measures are calculated differently. Both AI responses also failed to flag the sourcebook-variation caveat, which matters when a Retail Banking firm is determining scope across different product lines governed by different parts of the Handbook.
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

Mis-scoping the retail customer definition at the outset of a Consumer Duty programme is a foundational error with wide downstream consequences. If a Retail Banking firm uses the wrong threshold measure for charities — annual income rather than annual turnover — it may incorrectly exclude some charities from its Consumer Duty obligations or apply the Duty to entities outside its scope. Either error affects how the firm designs its product governance, fair value assessments, and complaints handling. The FCA's supervisory focus on Consumer Duty scope means that a mis-defined customer population will affect every downstream compliance process, and remediation once identified is resource-intensive and operationally disruptive.

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

← Previous finding Finding 2. Harm prevention under the Consumer Duty — the customer-acceptance defence 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). "Scope of the retail customer definition — micro-enterprises and charities — Retail Banking × 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/retail_banking/compliance/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/

APA 7th edition

RegLeg Specialist Panel. (2026). Scope of the 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/retail_banking/compliance/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/

Bluebook / OSCOLA (US + UK legal)

RegLeg Specialist Panel, Scope of the 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/retail_banking/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     = {Scope of the 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/retail_banking/compliance/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-005/}
}

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