The Financial Conduct Authority has published the findings of its landmark review into the impact of AI on retail financial services, with the technology set to become a driving force within the industry.
Led by FCA executive director Sheldon Mills, the Mills Review is the first of its kind to be initiated by a regulator globally.
Drawing on views from across the financial services landscape, the report identifies four major AI-driven shifts likely to impact the sector: the transformation of firm operations; the evolution of consumer journeys with people increasingly delegating to AI applications that act on their behalf; the reshaping of competition and market power; and the amplification of fraud and cyber risks.
It found that retail financial services are moving from human-led towards AI-enabled, continuous and delegated services, with AI set to reshape the sector by 2030, changing how firms operate, consumers make decisions and markets compete.
A fifth of people – equivalent to 11 million UK adults – are likely to use agentic AI. However, the FCA warned that while AI has the potential to improve access, personalisation and efficiency, it could also amplify risks associated with fraud, cyber security, consumer harm and market concentration.
Nearly seven in 10 (68%) consumers expressed concern about data misuse, while 67% expressed concern about a lack of protection and 65% about concentration of power among a small number of large organisations.
Despite this, the report said some behaviours point towards more advanced use. Among consumers who use AI in financial services, 24% report uploading personal financial data and 13% say they would be willing to grant real-time access to their financial information.
Executive director Sheldon Mills 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.”
Key recommendations
The review outlines seven recommendations for the FCA board and executive to consider, which it says will work together to adapt the regulatory framework, enable effective supervision and support better consumer outcomes.
They are:
- 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 model 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
Ashley Alder, chair of the FCA, said: “As is clear in the report, we need to keep pace with a rapidly changing environment and the principles-based, outcomes focused 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.”
Commenting on the review, Marianna Hunt, personal finance specialist at Fidelity International, said: “The way people seek information about their finances is evolving at remarkable speed. The rise of AI tools – particularly among younger investors – is changing how people research, plan and make decisions about their financial futures.
“At the same time, we know there is a clear advice gap in the UK. Many people are trying to equip themselves with the knowledge to make good financial decisions, but the quality and reliability of online information varies widely. Some of these sources are authorised and trustworthy, but others are not, which creates a real risk of misunderstanding and poor outcomes.
“This is exactly why it is so important that financial institutions are empowered to do more to support consumers. Measures such as the FCA’s new Targeted Support regime will enable providers to offer clearer nudges and guidance at key moments, helping people make better long-term decisions and avoid harmful actions or inactions. Consumers must have access to consistent, scalable and trusted support. By combining high quality guidance with the right regulatory framework, we can help to ensure that people feel confident and informed – whether they are using traditional advice channels or exploring new digital tools.”
Sam Christopher, proposition director at Quilter, said: “AI has the potential to deliver significant benefits across financial services through greater efficiency, lower costs and improved customer experiences. It could also help the industry better serve those who have historically struggled to access affordable support because of the advice gap.
“However, customer needs must remain at the heart of adoption. Firms and regulators should work together to create an environment where innovation can flourish, while ensuring consumers remain protected from the risks of inaccurate information, bias and misuse.”
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