Regulatory delays around AI in financial trading are putting consumers at “huge risk,” warns industry chiefs in reaction to the FCA’s Mills Review.
The review examined the impact of AI in retail financial services by 2030, setting out recommendations for the FCA to better protect industry and consumers.
It found that one in five UK adults are already open to AI making decisions for them, could amplify fraud, cybersecurity and consumer harm risks, and reshape how firms operate and markets compete, as the retail financial services sector moves away from human-led towards AI-enabled continuous and delegated services.
Andrew Morgan, Chief Product Officer at MahiMarkets, commented: “The Mills Review is important for UK growth, but the regulatory delay on AI is a concern if the target is only 2030. AI trading on behalf of retail users is already happening and it’s already irresponsible, meaning that we could face years of risks before regulation is in place.”
“We need far greater human accountability in the trading process, and that has to be measured outside of the AI loop. A system can think and do one thing, before writing an audit saying something completely different, which puts consumers at huge risk. Unless firms can safely act on AI recommendations and the underlying claims are quickly verifiable, then safety concerns will remain.”
The review outlined AI’s benefits within the sector in relation to reducing friction and tackling challenges such as advice gaps, low switching and protection gaps.
“The FCA’s AI Lab can play a vital role in ensuring responsible AI and safeguarding the industry, allowing firms to stress test innovations to behave predictably so they can earn the trust of regulators and the public. The race to build better AI shouldn’t come at the expense of understanding, validation and governance.”
Dr Janet Bastiman, Chief Data Scientist at Napier AI
“Collaborative initiatives such as the FCA’s Supercharged Sandbox and AI Live Testing can also provide huge benefits for the future of AI in financial services, testing AI in realistic regulatory environments. This helps firms build with explainability, governance and human oversight in the development process, rather than a bolt-on later in the process.”
The review set out seven priority recommendations to the FCA Board, including to secure and adapt the regulatory perimeter, to monitor the transition to autonomous models, to scale up the FCA’s AI Lab to support AI models and systems innovation within the sector, and to build and adopt an AI-enabled agentic supervisory model.
