FCA Launches Long-Term AI Review

The Financial Conduct Authority (FCA) has launched a review into the implications of advanced artificial intelligence (AI) for consumers, retail financial markets, and regulators, following criticism that it has not moved quickly enough on AI regulation.

Led by Sheldon Mills, the review will seek views across four interrelated themes on how AI could evolve in the coming years. This includes the development of more autonomous and agentic systems, and how these advances could reshape markets and firms, influence competition and market structure, and affect the UK’s competitiveness.

The review will also examine the impact of AI on consumers, including how AI may shape consumer behavior and expectations, and how consumers could, in turn, influence financial markets. In addition, it will consider how financial regulators may need to adapt to ensure retail financial markets continue to function effectively.

While wholesale markets and wider societal impacts fall outside the scope of the review, the FCA said it recognizes that developments in these areas may indirectly affect retail financial services and will be considered where relevant. The regulator added that it is carrying out separate, extensive work on AI in wholesale markets, including through its live testing partnership.

Mills said: “AI is already shaping financial services, but its longer-term effects may be more far-reaching. This review will consider how emerging uses of AI could influence consumers, markets, and firms, looking towards 2030 and beyond.

“By taking a forward-looking view, the review will help the FCA continue to support innovation while promoting the safe and trusted adoption of AI in retail financial services.”

The move comes shortly after the Treasury Committee criticised the Bank of England, the FCA and the Treasury for what it described as a “wait-and-see” approach to AI regulation.

In its report, the committee recommended that the FCA publish practical guidance on the use of AI by the end of this year. It said the guidance should clarify how existing consumer protection rules apply to AI-driven activities and set out clearer lines of accountability where harm is caused by AI systems.