The FCA today launched the Mills Review, exploring the implications of advanced AI on consumers, retail financial markets and regulators.
The FCA is seeking views on 4 interrelated themes:
- How AI could evolve in the future, including the development of more autonomous and agentic systems.
- How these developments could affect markets and firms, including changes to competition and market structure and UK competitiveness.
- The impact on consumers, including how consumers will be influenced by AI but also influence financial markets through new expectations.
- How financial regulators may need to evolve to continue ensuring that retail financial markets work well.
Richard Pinch, Senior Risk Director at leading independent financial services consultancy Broadstone, commented:
“The FCA’s Mills Review is a clear signal that regulators are looking beyond today’s use of AI and towards its long-term impact on retail financial services, consumer outcomes and financial stability.
“As AI becomes more embedded in customer interactions, decision-making and operational processes, the regulatory focus must by necessity shift to governance and accountability to protect consumer outcomes.
“The challenge across the market will be to demonstrate that AI-driven models and tools align with the ethos of Consumer Duty as they evolve. Those that build strong oversight frameworks now will be better placed to innovate with confidence while meeting the FCA’s expectations.”
Mike Barrett, consulting director at the lang cat, said: “AI is moving so quickly that it’s going to be hard for any regulator to stay ahead of the game. We’re seeing this technological acceleration play out globally with governments, industries, businesses and consumers all scrambling to keep up.
“While it’s good to see the FCA give AI much-needed attention, a review that culminates in a report to its board in the summer doesn’t feel like it’s giving this topic the weight it deserves, so we hope this is the first stepping stone to a broader strategy. AI is going to keep making strides forward and the FCA needs to make sure the technology doesn’t hurt client outcomes.
“Consumer Duty will go some way to ensuring businesses use the technology safely, but it may be that real guard rails need to be put in place where AI meets financial products and services.”
Amal Jolly, CEO, Saturn said: “It’s really encouraging to see the FCA engaging with the development of AI and ensuring it’s used safely. It’s absolutely crucial that any AI interaction with financial services is built with compliance front and centre. Consumer protection is of paramount importance and AI must be built and used in responsible ways.
“It’s so crucial that AI is used in the right way – that data is secure, that it supports more compliant processes, not just to speed things up, and that is directly helps improve client outcomes.”
He added: “AI is already making financial advice more efficient, making advisers and paraplanners more productive by streamlining boring manual tasks that usually take up hours of time. As AI continues to develop the cost to serve advice will keep falling and making advice accessible to more people.
“The danger at the moment is consumers using AI tools directly to generate financial advice – that’s a really key avenue for the FCA to assess. Not only financial services firms using AI, but AI businesses inadvertently providing what people may interpret as real ‘advice’ through the use of widely-available large language models.”
