In-house legal teams at payment institutions and e-money firms operating under the Consumer Duty are increasingly using AI to validate Principle 12 scope opinions for retail-customer-facing services, draft scope memos on PRIN 2A exclusions, and prepare director briefings on FCA Feedback Statements such as FS25/2. The work product sits at the centre of new-product legal opinions, scope-of-application memos, and supervisor-correspondence drafting.
Two frontier AI models tested by the RLB Specialist Panel produced 4 substantive failures on this regulation under audit conditions. The failure classes recorded are: Misstated Statutory Architecture, Reversed the PRIN 2A Group-Insurance Exclusion, Invented Dual-Event Timeline for a Single FS25/2 Withdrawal, Refusal to Confirm FS25/2 Withdrawal Count. Questions were prepared by the RLB Specialist Panel based on real practical AI usage in the workflows the respective audience uses AI for, and each finding is bound to verbatim regulator-issued source text held as primary substrate.
The Consumer Duty (PS22/9 introducing Principle 12 and PRIN 2A, in force for open products from 31 July 2023 and for closed products from 31 July 2024) is the central retail-conduct regime the FCA now uses to grade firm behaviour, and the failure modes seen here all land inside the day-to-day work product that payment-institutions in-house legal teams sign off on.
For payment-institutions legal, the operational consequence is direct. Scope-of-application memos, new-product legal opinions, and director attestations on Consumer Duty applicability all rest on accurate PRIN 2A scope and FSMA-statute framing. A defect imported from AI work product surfaces on legal-file review or board challenge, and the in-house function carries the professional exposure.
Citation IDs for the findings in this brief: RLB-H-GB-FCA-CONSUMER-DUTY-PS22-9-Q002-Sonnet46, RLB-H-GB-FCA-CONSUMER-DUTY-PS22-9-Q018-Opus47, RLB-H-GB-FCA-CONSUMER-DUTY-PS22-9-Q020-Opus47, RLB-H-GB-FCA-CONSUMER-DUTY-PS22-9-Q020-Sonnet46. Each citation links to the per-finding record, the AI subject answer, and the regulator-issued substrate excerpt the answer was tested against. The RLB Specialist Panel maintains an audit-traceable record of which model produced which answer, against which substrate passage, and the binding is what makes the finding referenceable in firm work product and in supervisory correspondence.
The findings below are the ones that payment-institutions in-house legal teams working under the Consumer Duty are most likely to encounter in the AI tools they already use, and the briefing sections that follow read each finding against the regulator-issued text.
This is the consolidated view of findings. Click the Citation IDs or 'see details →' on any item for the full details for each finding.
Payment Institutions legal teams advising on the FSMA basis of the Consumer Duty need the post-Brexit FSMA 2023 architecture acknowledged alongside FSMA 2000. The model's silent omission of FSMA 2023, if carried into a regulatory mapping opinion, undermines the authority of the firm's understanding of the live conduct framework.
Payment Institutions legal teams advising on whether their group insurance distribution arrangements fall within the Consumer Duty need the PRIN 2A.1.8R exclusion preserved. The model's reversal would push the firm to apply the Duty to activities the FCA has expressly excluded.
Payment Institutions legal teams reviewing the supervisory record need accurate accounts of withdrawn letters and reports; the model's repeated fabricated timeline across multiple questions is a structural failure that any legal opinion citing it would carry forward.
Payment Institutions legal teams should treat externally-cited URLs in AI output as fabricated until verified; the model's Clifford Chance citation is the signature failure mode.
Every finding on this page compares an AI subject's account of the rule against the regulator's verbatim text from the regulator's own portal. Both are linked. Each delta, its root causes, and impact analysis are documented and published with immutable Citation IDs.