British Watchdog Wants To Regulate AI Models Giving Financial Advise. Millions Are Already Doing It.
Britain should consider bringing the world’s most powerful artificial intelligence models under regulatory oversight as consumers increasingly rely on tools such as ChatGPT, Claude and Gemini for financial decisions, according to a new review led by a senior official at the UK‘s Financial Conduct Authority (FCA).
The recommendation comes from Sheldon Mills, executive director of consumers and competition at the FCA, who said the government should “consider securing and adapting the regulatory perimeter for AI-mediated retail financial services by launching a review into the scale, nature and impact of general-purpose LLMs outside the perimeter.”
The recommendations are part of the FCA’s “Mills Review,” launched in January to examine how artificial intelligence could reshape retail financial services through 2030 and beyond. The review evaluates the technology’s impact on consumers, financial institutions, market competition, and the role of regulators as AI systems become more autonomous and capable.
One of the review’s central concerns is the rapid adoption of generative AI by consumers without a clear understanding of the legal protections available. According to the Review, more than one-quarter of UK consumers already trust AI tools such as OpenAI’s ChatGPT, Anthropic’s Claude and Google‘s Gemini for financial advice, despite the fact that these services do not provide the same regulatory safeguards as licensed financial advisers.
Mills warned that the distinction between regulated financial advice and AI-generated recommendations could become increasingly blurred as these models grow more sophisticated. If consumers begin relying on AI systems for investment decisions, budgeting or financial planning, regulators may need additional authority to oversee how those services operate and protect users from potential harm.
Beyond consumer protection, the review also highlights growing systemic risks tied to the financial industry’s dependence on a small number of technology providers. As banks and financial firms increasingly build products and services around the same AI models, cloud platforms and infrastructure providers, the report warns that common vulnerabilities could create correlated failures across the financial system.
Such concentration risk could amplify disruptions if a major AI platform experiences outages, cyberattacks or technical failures, potentially affecting multiple institutions simultaneously rather than isolated firms. The FCA’s board chairman, Ashley Alder, said “We need to keep pace with a rapidly changing environment and the principles-based, outcomes focussed [sic] approach we’ve taken on AI.”
Rather than abandoning Britain’s principles-based regulatory approach, Alder said authorities should adapt existing frameworks while remaining prepared to adjust the regulatory perimeter if necessary. The review arrives as financial regulators worldwide grapple with the emergence of increasingly capable AI systems, including “agentic” AI that can perform complex tasks with limited human supervision.
Authorities are examining not only cybersecurity and operational risks but also questions surrounding accountability when AI systems make or influence financial decisions. Britain has generally favored a sector-by-sector approach to AI regulation instead of adopting a sweeping law similar to the European Union’s AI Act.
However, the latest recommendations suggest UK regulators are becoming more open to targeted oversight of foundational AI models if evidence shows they pose significant risks to consumers or financial stability.
