Retail customer definition — charity threshold and sourcebook variation

2. Retail customer definition — charity threshold and sourcebook variation

• 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. Both correctly identified that micro-enterprises and small charities fall within the definition of "retail customer" under PRIN 2A, but each introduced a material error: one AI substituted "annual income" for "annual turnover" as the qualifying measure for charities, while another correctly named charities as in-scope but omitted the specific £1 million annual turnover threshold entirely and also failed to note that the definition varies depending on which FCA sourcebook applies.
• What the regulator actually says: The definition of retail customer 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, and AI tools appear to conflate them — likely because in everyday language they are used loosely as synonyms, even though they carry different meanings in a regulatory context. The omission of the sourcebook-variation qualifier is a separate failure: AI tools tend to present regulatory definitions as uniform when the source rules themselves contain important scope-limiting caveats.
• 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