Financial Conduct Authority looks to regulate AI financial advice

Artificial intelligence (AI) could become a ‘defining force’ in the retail financial services space, according to a new report published by the Financial Conduct Authority (FCA).  

Earlier this week, the FCA published the ‘Mills Review’, a commissioned research report that explored the growing use of AI in the retail sector for financial advice and the possible impacts on firms, consumers, and regulators alike.

One of the most notable findings was that one-fifth of people, equivalent to 11m UK adults, would be likely to use  AI in personal finance. These tools can act autonomously within pre-set goals, although consumers surveyed by the FCA raised concerns about trusting the ‘algorithm’.

Sheldon Mills, executive director at the FCA, said: “Artificial intelligence will transform financial services by 2030. It creates significant opportunities for consumers, firms and the wider economy. This report sets out a roadmap for how industry regulators and government can prepare for the next phase of AI-driven change in our world-leading financial services sector.”

The risks to pensions were also considered, as AI tools could increase the risk of poor decisions for consumers that rely on incomplete or inaccurate advice outputs – something AI is known to do fairly often across interactions.

What are the recommendations from the report?

The Mills Review presented seven ‘priority’ recommendations to be considered for the FCA Board to consider, which are as follows:

• Secure and adapt the regulatory perimeter.
• Strengthen system-wide coordination and oversight.
• Monitor the transition to autonomous models and adapt regulatory frameworks.
• Scale up the FCA's AI Lab to support AI models and system innovation in financial services.
• Enable the foundations for agentic finance.
• Build and adopt an AI-enabled agentic supervisory model.
• Develop a trusted public-interest AI-enabled financial capability service.

While AI can be helpful in providing basic explanations for financial queries, it is still a very new space and is completely unregulated. AI has been known to ‘hallucinate’ and provide inaccurate or incorrect information. When it comes to making important financial decisions that could have a serious impact on your wealth, it is not a substitute for regulated financial advice.  

If you’re interested in seeking real authentic and FCA approved advice to ensure the best possible wealth protection for you or your family, we can help. Give us a call on 0333 323 9065 or book a free no obligation initial consultation with a member of our team to find out more. 

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.