Landmark review of AI in finance presents warning of risk

The Financial Conduct Authority (FCA) has published the landmark Mills Review, examining the state and future of agentic AI’s involvement in retail financial services.

Conducted by the FCA’s executive director, Sheldon Mills, the review was commissioned by the regulator to determine how AI could reshape financial services for consumers, firms, markets and regulators by 2030 and beyond.

The report has identified four major AI-driven shifts likely to impact these services: the transformation of firm operations; the evolution of consumer journeys; the reshaping of competition and market power; and the amplification of fraud and cyber risks.

It noted that already a fifth of people in the UK adults, around 11 million people, are likely to use AI that can act autonomously within pre-set goals. However, consumers in the survey are concerned about trust and control of AI.

“Artificial intelligence will transform financial services by 2030,” said Mills.

“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.”

While it has acknowledged there are many benefits that could come from increasing use of AI in finance, including more efficient money management and streamlining the internal functions of firms, it also warns of concerning risks.

Notably, it warns that accountability will become significantly harder to trace as more and more actions are delegated to agents.

It is also concerned that consumers will not scrutinise which AI tools have gone through formal regulatory routes to offer help with financial management.

The report has issued a number of recommendations for the FCA to consider, including to secure and adapt the regulatory perimeter, to strengthen system-wide coordination and oversight, to monitor the transition to autonomous models and adapt regulatory frameworks.

It also recommended the FCA scales up its 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 and develop a trusted public-interest AI-enabled financial capability service.

Responding to Mills’ findings, Ashley Alder, chair of the FCA’s board, said: “As is clear in the report, we need to keep pace with a rapidly changing environment and the principles-based, outcomes focussed approach we’ve taken on AI – relying on the Consumer Duty and Senior Managers Regime – has been critical to us doing so.

“The recommendations build on work the FCA has been doing – not least allowing firms to test their use of AI with us – and our own use of AI to be a smarter regulator, more efficient and effective.”

The full report is available here.

“The FCA’s Mills Review reinforces that firms should treat agentic AI as an accountability and governance issue now, while providing greater confidence to innovate responsibly as AI adoption accelerates,” commented Emma Banymandhub, chief executive of the trade group The Payments Association.

“AI has enormous potential for financial services, but realising that potential will depend on strong governance, clear accountability and maintaining consumer trust.”