In-house legal teams at retail banks operating under the Consumer Duty are increasingly using AI to validate Principle 12 scope opinions, draft Section 138D risk notes for product-launch governance, prepare partner-level briefings on PRIN 2A obligations, and reconcile FCA Feedback Statements such as FS25/2 against existing supervisory correspondence. The work product sits at the centre of new-product approval files, board legal opinions, and litigation-defence preparation.
Two frontier AI models tested by the RLB Specialist Panel produced 8 substantive failures on this regulation under audit conditions. The failure classes recorded are: Misstated Statutory Architecture, Inference Drift on the Foreseeable-Harm Safe Harbour, Confused Guidance with Rule on Consumer Testing, Hedge in Place of Verified FS25/2 Figure, Refusal to Confirm a Documented FS25/2 Count, 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 retail-banking in-house legal teams sign off on.
For retail-banking legal, the operational consequence is direct. New-product approval memos, Section 138D risk assessments, and director-attestation packs all rest on accurate Principle 12 and PRIN 2A framing. A defect imported from AI work product surfaces on the next litigation pull or supervisory enquiry, 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-Q003-Opus47, RLB-H-GB-FCA-CONSUMER-DUTY-PS22-9-Q007-Sonnet46, RLB-H-GB-FCA-CONSUMER-DUTY-PS22-9-Q013-Opus47, RLB-H-GB-FCA-CONSUMER-DUTY-PS22-9-Q013-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 retail-banking 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.
Retail Banking 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, leaves a gap in the firm's understanding of the live conduct framework and undermines the authority of the opinion in supervisor-facing disclosures.
Retail Banking legal teams drafting Consumer Duty interpretive notes for the business need to preserve the single-test safe harbour at PRIN 2A.2. The model's multi-condition reconstruction would, if adopted in an interpretive note, set the business up to apply a defensive standard the rule does not require.
Retail Banking legal teams advising on whether consumer testing is mandatory under the Duty need to distinguish PRIN 2A.5 from FG22/5 cleanly. The model's specific citation of PRIN 2A.5.10R as the binding requirement is a sourcing error that, if relied on, imports a non-rule into the firm's compliance commitment.
Retail Banking legal teams handling FCA correspondence need accurate accounts of FS25/2 (March 2025). The model's split timeline of April and August 2025 events is a fabrication that, if imported into supervisor-facing correspondence, would be spotted immediately and damage the firm's standing on a question of easily verifiable fact.
Retail Banking legal teams cannot use the model's evasive Dear CEO letter response as the basis for an FCA-facing position; the figure is published in FS25/2 and the firm is expected to know it. The evasion response is a signal to go to the source, not a defensible legal position.
Retail Banking legal teams advising on the Consumer Duty's scope for group insurance distribution need the PRIN 2A.1.8R exclusion preserved. The model's reversal of the exclusion, paired with a fabricated 'CP23/something' citation, would push the firm to apply the Duty to activities the FCA has expressly excluded, a costly mis-scoping with no regulatory benefit.
Retail Banking legal teams reviewing the FCA's supervisory record need accurate accounts of withdrawn letters and reports; the model's repeated fabricated timeline across multiple questions confirms the failure is structural rather than incidental.
Retail Banking legal teams reviewing AI-assisted briefings need to treat any externally-cited URL as fabricated until verified. The model's fabricated Clifford Chance citation is the signature of a model that is simultaneously under-confident on retrievable content and over-confident in citation generation.
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.