The Financial Conduct Authority (FCA) has called on the UK government to strengthen its regulatory powers to shield consumers from the potential dangers of artificial intelligence, according to a landmark review published on Tuesday.
AI transformation of financial services by 2030
The Mills review, led by FCA executive director Sheldon Mills, examined how AI will reshape retail financial services from 2030 onward. It found that firms are already shifting from human-led interactions to AI-enabled services for everyday consumers, which could improve access and personalisation but also heighten risks of fraud, cyber-attacks, 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. “While AI has the potential to improve access, personalisation and efficiency, it could also amplify risks associated with fraud, cybersecurity, consumer harm and market concentration.”
Recommendations for expanded oversight
The review recommends that the FCA adopt its own AI-enabled supervisory model and that the government bolster its existing powers. This includes expanding authority over “critical third parties” such as AI firms and cloud providers, and granting “direct powers” to regulate tech companies to prevent digital monopolies, boost competition, and protect consumers.
Mills told the Financial Times that regulators must embrace AI internally to keep pace with change and “monitor, detect and tackle the risks.” He described the situation as “an arms race.”
“Artificial intelligence will transform financial services by 2030,” Mills said in a statement. “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.”
Consumer openness to AI amid regulatory gaps
The FCA found that one-fifth of UK adults – about 11 million people – are open to using AI for financial decisions such as savings and borrowing. This is despite AI models not being scrutinised by financial regulators and consumers lacking compensation if they lose money.
Mills’ report recommends the FCA launch another review within six months focusing on potential harm to consumers using AI for personal finance, as well as risks from unregulated financial services powered by AI, which often fall outside the regulator’s remit.
Broader context: Anthropic’s Mythos model
The review comes amid growing debate over the handling of Anthropic’s powerful AI model, Mythos, which poses serious cybersecurity threats. The US firm restricted its use to vetted firms, including some UK banks, amid fears that misuse could wreak havoc on the financial system. Use of Mythos by US firms was halted last month by the Trump administration before being partially restored last week.
The FCA will now deliberate on how to respond to the Mills review’s recommendations.
