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The UK’s Financial Conduct Authority (FCA) has published a landmark review examining how artificial intelligence (AI) is set to reshape retail financial services, warning that regulators must move quickly to keep pace with rapid technological advances while ensuring consumer protection.
The report, known as the Mills Review, was led by FCA Executive Director Sheldon Mills and commissioned by the regulator’s board. According to the FCA, it is the first comprehensive AI review of its kind initiated by a financial regulator globally.
Drawing on insights from across the financial services industry, the review identifies four major ways AI is expected to transform the sector: the evolution of firms’ internal operations, changes in customer financial journeys, shifts in market competition and concentration, and increased exposure to fraud and cybersecurity threats.
The report notes that AI is likely to become a defining force in financial services by the end of the decade, fundamentally changing how firms deliver services, how consumers make financial decisions, and how financial markets operate.
While AI presents significant opportunities to improve efficiency, personalisation and access to financial services, the review cautions that it could also intensify risks related to fraud, cybercrime, consumer harm and market dominance.
Mills said regulators are engaged in an “arms race” to keep pace with the rapid evolution of AI technologies, recommending that the FCA assess within the next three to six months whether large language models such as ChatGPT, Claude and Gemini, when used to provide financial guidance, should fall within the regulator’s formal oversight.
The review also highlights growing consumer interest in agentic AI—systems capable of taking autonomous financial actions within predefined parameters. FCA-commissioned research found that around one in five UK adults, equivalent to approximately 11 million people, are likely to adopt such technologies. However, the report notes that concerns around trust, transparency and user control remain significant barriers to wider adoption.
According to Mills, AI has the potential to deliver substantial benefits for consumers, financial institutions and the broader economy, provided appropriate regulatory frameworks evolve alongside technological innovation.
“Artificial intelligence will transform financial services by 2030,” he said. “It creates significant opportunities for consumers, firms and the wider economy. This report provides a roadmap for how industry, regulators and government can prepare for the next phase of AI-driven transformation.”
To support the responsible adoption of AI, the review outlines seven strategic recommendations for the FCA. These include adapting the regulatory perimeter, strengthening cross-sector regulatory coordination, monitoring the emergence of autonomous financial models, expanding the FCA’s AI Lab to support innovation, enabling the development of agentic finance, adopting AI-powered supervisory tools, and creating a trusted public-interest AI-enabled financial capability service.
Commenting on the findings, FCA Chair Ashley Alder said the regulator’s principles-based approach—anchored on the Consumer Duty and Senior Managers Regime—has positioned it to respond effectively to emerging AI developments.
He added that the recommendations build on the FCA’s existing initiatives, including regulatory AI testing environments for firms and the regulator’s own use of artificial intelligence to enhance supervisory efficiency and effectiveness.
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