AI Hallucinations Affecting Risk at Retail Banking Firms in the United Kingdom

Findings — impact summary

This is the consolidated view of findings. Click 'see details →' on any item for the full details for each finding.

1. Finding 1. Foreseeable harm and customer risk acceptance under the Consumer DutyRLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003

   A Risk team that incorporates the AI's version of the harm-prevention threshold into the firm's Consumer Duty implementation framework would be building its compliance position on a standard the FCA has not set. This misstatement would flow downstream into product governance assessments, customer vulnerability policies, complaints-handling standards, and the firm's annual Consumer Duty board attestation. If the FCA identifies the discrepancy during a supervisory review or thematic visit, the firm faces the prospect of required remediation across multiple business lines, potential financial penalties under the FCA's Consumer Duty enforcement powers, and public censure — with associated reputational damage in a retail market where consumer trust is a material commercial asset.

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