Retail Banking × Risk — United Kingdom · published 2026-05-28 · methodology v2.1

Foreseeable harm and customer risk acceptance under the Consumer Duty

RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003

What the RLB Specialist Panel found

1. Foreseeable harm and customer risk acceptance under the Consumer Duty

Question (paraphrased to protect IP): Does the Consumer Duty require firms to prevent all foreseeable harm, and what is the effect of a retail customer knowingly accepting a risk?
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 tested on this question described a multi-condition framework for discharging the harm-prevention obligation: the firm must have acted in good faith, supported the customer's understanding, avoided foreseeable harm caused by its own conduct, and otherwise complied with the Duty — only then does the customer's risk acceptance avoid a breach. This elaborated test was presented as a straightforward reading of the rule.
What the regulator actually says: The FCA's text sets a single, clear threshold: "Where a firm reasonably believes a retail customer understands and accepts such risks, it will not breach the rule if it fails to prevent them."
Why the AI went wrong: The AI replaced the regulator's single qualifier — the firm's reasonable belief — with a cluster of additional conditions that do not appear in the source rule. The fabricated conditions are individually plausible, but their combination produces a materially different and more onerous legal test than the FCA published.
Cited source(s):
https://handbook.fca.org.uk/handbook/PRIN/2A/2.html — Pretextual
https://www.fca.org.uk/publication/finalised-guidance/fg22-5.pdf — Pretextual

Impact for this audience

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.

References — raw findings (per AI model)

RLB-H-GB-FCA-CONSUMER-DUTY-PS22-9-Q003-Opus47 Claude Opus 4.7 (web search on)

This finding also affects

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). "Foreseeable harm and customer risk acceptance under the Consumer Duty — Retail Banking × Risk — United Kingdom." Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003. RegLegBrief AI Hallucination Research, published 2026-05-28. https://reglegbrief.com/audiences/sectors/gb/retail_banking/risk/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-003/

APA 7th edition

RegLeg Specialist Panel. (2026). Foreseeable harm and customer risk acceptance under the Consumer Duty [Hallucination finding RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003]. RegLegBrief AI Hallucination Research. https://reglegbrief.com/audiences/sectors/gb/retail_banking/risk/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-003/

Bluebook / OSCOLA (US + UK legal)

RegLeg Specialist Panel, Foreseeable harm and customer risk acceptance under the Consumer Duty [RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003], RegLegBrief AI Hallucination Research (May 28, 2026), https://reglegbrief.com/audiences/sectors/gb/retail_banking/risk/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-003/.

BibTeX

@misc{reglegbrief_RLB_F_GB_FCA_CONSUMER_DUTY_PS22_9_Q003,
  author    = {RegLeg Specialist Panel},
  title     = {Foreseeable harm and customer risk acceptance under the Consumer Duty},
  year      = {2026},
  publisher = {RegLegBrief AI Hallucination Research},
  note      = {Hallucination finding Citation ID: RLB-F-GB-FCA-CONSUMER-DUTY-PS22-9-Q003},
  url       = {https://reglegbrief.com/audiences/sectors/gb/retail_banking/risk/finding/GB-FCA-GB-001-CONSUMER-DUTY-PS22-9-v1-003/}
}

← Back to case study summary Case study detail →

About Citation IDs →