FCA Review Calls for Expanded Powers Over AI Firms in Finance

The Financial Conduct Authority published the Mills review examining how AI will reshape financial services from 2030 onward. The Guardian reported that the review urged ministers to expand the FCA's powers over AI firms and cloud providers to protect consumers. The review found companies already moving from human-led activities to AI-enabled services for everyday consumers.

It stated that the shift could make financial advice more accessible to lower-income households while increasing risks of fraud, cyber threats and consumer harm. “AI is likely to become a defining force in retail financial services, transforming how firms operate, how consumers make financial decisions and how markets function,” the FCA said.

The same statement added that AI could amplify risks associated with fraud, cybersecurity, consumer harm and market concentration.

Sheldon Mills, the FCA executive director who led the review, told the Financial Times that regulators must embrace AI internally to monitor and tackle risks. “It is an arms race,” he said. Mills also stated that artificial intelligence will transform financial services by 2030.

The review recommended that the FCA adopt its own AI-enabled model to supervise firms. It further called for government action to grant the FCA direct powers to regulate tech companies and prevent digital monopolies. The FCA found that a fifth of people across the UK, or 11 million individuals, are open to using AI for financial decisions on savings and borrowing.

The review was announced in January. Mills’ report recommended that the FCA launch another review within six months on potential harm to consumers using AI for personal finances. It also urged examination of risks from companies offering unregulated financial services via AI.