Britain’s Financial Conduct Authority has launched a review into the implications of advanced AI on retail financial markets, consumers and regulators.

The review will consider: how artificial intelligence could evolve, including through more autonomous and agentic systems; how these developments could affect markets and firms; how consumers will be influenced by AI and how they may influence markets through new expectations; how regulators may need to evolve.

The review is led by former FCA executive Sheldon Mills, who says 75% of UK financial firms use AI but the technology’s impact on retail financial services remains unclear.  

“For payments, investments, lending and insurance, AI may act as a personal intermediary or ‘proxy’, driving new value propositions and customer opportunities,” he said.  

AI can enable firms to innovate and better meet customer needs, but it can also amplify risks, including hallucinatory advice and erosion of consumer trust, he adds.

“It also significantly expands the potential for cyber-enabled threats such as model manipulation, and fraud and financial crime risks such as deepfake technologies and synthetic identities to exploit onboarding or decision-making processes.”