The UK Financial Conduct Authority (FCA) has published a report on artificial intelligence (AI) called the Mills Review, named after Sheldon Mills, the Executive Director of Competition at the FCA who Chaired the initiative.
The FCA claims this is the first type of review by a regulator globally.
The review was pursued as it is anticipated that consumers and businesses will continue to leverage AI to a greater degree regarding financial decisions and actions and the tech has the potential to “fundamentally change how financial services operate.”
The Mills Review highlighted key findings including the following:
- Retail financial services are moving from human-led, towards AI-enabled, continuous and delegated services.
- AI could reshape the sector by 2030 – changing how firms operate, consumers make decisions, markets compete and risks emerge.
- AI could improve outcomes and support growth by reducing friction and tackling long-standing challenges, such as advice gaps, low switching and protection gaps. But it could also amplify risks associated with fraud, cyber security and consumer harm.
- Consumer adoption will depend on trust, control and access – even though 1 in 5 UK adults are already open to AI making decisions for them.
The report included multiple, broad recommendations suggesting an AI enabled agentic supervisory model should be created. The FCA has already launched an AI Lab to enable the development of AI services. As well, the existing regulatory framework needs updating to deal with the emergence of AI.
Ashley Alder, Chair of the FCA, said the report outlines how AI can drive benefits for consumers and businesses and it is important the UK keeps pace.
Monica Eaton, Founder and CEO of Chargebacks911, commented on the report saying the FCA is correct to identify fraud and risk as one of the defining outcomes of AI adoption. While AI can help firms identify and deal with fraudsters and hacks the same tech can be used by the bad guys to create more sophisticated scams and traps. Eaton said the race between the good and the bad will only accelerate.
“The review also points to a more fundamental shift. Consumers are increasingly prepared to delegate financial decisions to AI agents acting within pre-set goals, with the FCA’s own research suggesting 11 million UK adults are open to this. That shift can make it harder to point to the moment someone clicks to buy and explicitly authorises a transaction, which has long been one of the clearest signals used to resolve a dispute or fraud claim.”
Eaton added that firms which only view AI as an efficiency and speed boost will fall behind.
“It’s up to firms to build accountability into the transaction itself, before disputes arrive at scale.”