The Financial Conduct Authority has published a landmark review predicting artificial intelligence will fundamentally reshape financial services by the end of the decade, with agentic AI poised to help tackle the advice gap while creating new regulatory, competition and consumer protection challenges.
The 147-page Mills Review, commissioned by the FCA Board and led by executive director Sheldon Mills, concludes that AI will become “a defining force” by 2030 and beyond, transforming how firms operate, how consumers make financial decisions and how regulators supervise markets.
For financial advisers, one of the report’s most significant conclusions is that AI could improve access to financial support by helping address long-standing market failures, including the advice gap, protection gap and consumers’ reluctance to switch products.
The review notes that only 9% of UK adults currently receive traditional financial advice each year, while just 30% hold life or income protection.
It argues that AI could help consumers understand complex decisions, identify when regulated advice is appropriate and manage their finances more proactively.
The report states: “AI can address longstanding weaknesses in retail financial markets, including the advice gap, the protection gap, low switching, financial exclusion and suboptimal saving.”
Rather than replacing advisers overnight, the review envisages AI gradually moving from providing information to acting on consumers’ behalf within agreed limits.
Initially, consumers are expected to use AI to explain financial concepts, summarise products and prepare questions.
Over time, AI agents could compare products, monitor finances continuously, recommend actions and eventually carry out tasks such as switching accounts, reallocating savings or managing subscriptions once consumers have granted permission.
The FCA believes this could reduce inertia, improve consumer outcomes and make financial advice and guidance more accessible, particularly for people who are less financially capable or currently underserved.
Research commissioned for the review suggests consumer demand for this technology is already emerging.
The FCA found that around one in five consumers – equivalent to roughly 11 million UK adults – are likely to use agentic AI capable of acting autonomously within pre-set goals.
Interest is strongest in complex financial areas including debt advice, pensions and investments, although consumers continue to express concerns around trust, control and data security.
The regulator’s wider consumer research also found that 16% of consumers already use AI for financial services, mainly to explain or compare information, while two-thirds remain concerned about issues such as data misuse, lack of protection and the concentration of power among a small number of technology companies.
However, the review stresses that AI is unlikely to eliminate the need for human involvement entirely.
Instead, it introduces an “AI autonomy spectrum”, describing how humans will gradually move from carrying out financial tasks themselves towards supervising AI systems operating within agreed boundaries.
Depending on the use case, people could act as operators, collaborators, consultants, approvers or ultimately observers monitoring AI-driven outcomes.
Alongside opportunities, the review warns that increasing AI autonomy creates significant new risks.
It identifies four major AI-driven shifts expected to reshape retail financial services: the transformation of firms’ operations, the evolution of consumer journeys, changes to competition and market power, and the amplification of fraud and cyber risks.
The report argues that hyper-personalisation could improve product suitability but also create risks around opaque pricing, manipulation and bias, while increasing reliance on a small number of AI providers could concentrate market power.
It also warns that AI-powered fraud, deepfakes, synthetic identities and cyber attacks are likely to become more sophisticated, requiring firms and regulators to develop equally advanced defensive capabilities.
Despite those risks, the review concludes that the FCA’s existing principles-based regulatory framework remains broadly fit for purpose.
FCA puts Consumer Duty at heart of AI review
It says the Consumer Duty, Senior Managers and Certification Regime, operational resilience requirements and outcomes-based regulation provide a strong foundation for supervising AI, although additional guidance will be needed as firms adopt increasingly autonomous systems.
To prepare for the next phase of AI adoption, the review makes seven recommendations for the FCA board.
These include adapting the regulatory perimeter, strengthening system-wide oversight, monitoring firms’ transition towards autonomous AI models, expanding the FCA’s AI Lab, creating the foundations for “agentic finance”, building an AI-enabled supervisory model and developing a trusted public-interest AI financial capability service.
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.”
Responding to the review, FCA chair Ashley Alder said the report anticipated “the fundamental change agentic AI will bring to financial services”.
He said: “It highlights how consumers and firms can reap significant potential benefits as well how risks can be managed.
“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.”
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