FCA review says AI could reshape UK retail finance by 2030

The UK Financial Conduct Authority has published a board-commissioned review of artificial intelligence in retail financial services, warning that the technology is likely to alter firm operations, consumer decision-making and market structure by 2030. Research commissioned by the FCA found that one in five people, equivalent to 11 million UK adults, are likely to use AI tools that can act autonomously within limits set by the user.

The review, led by FCA executive director Sheldon Mills, examines how advanced AI could affect consumers and regulated firms. The FCA described the work as the first review of its kind initiated by a regulator globally.

The report identifies four main areas of change: the way financial firms run their operations, the design of consumer journeys, the balance of competition and market power, and the potential growth of fraud and cyber risks. It concludes that AI could improve access, personalisation and efficiency in retail finance, while also increasing risks tied to consumer harm, cyber security, scams and market concentration.

Agentic AI, the area highlighted in the FCA’s consumer research, refers to systems that can carry out tasks on behalf of a person within pre-set goals. In personal finance, that could mean tools that compare products, organise information or take actions permitted by the user. The FCA said the survey also showed consumer concerns about trust and control.

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.”

Recommendations for the regulator

The Mills Review sets out seven recommendations for the FCA board and executive to consider as AI use develops across retail financial services.

• Secure and adapt the regulatory perimeter.
• Strengthen system-wide coordination and oversight.
• Monitor the shift to autonomous models and adjust regulatory frameworks.
• Expand the FCA’s AI Lab to support innovation in AI models and systems for financial services.
• Enable the foundations for agentic finance.
• Build and adopt an AI-enabled agentic supervisory model.
• Develop a trusted public-interest AI-enabled financial capability service.

The regulatory perimeter determines which activities and firms fall under FCA supervision. As AI systems take on more functions in retail finance, the report indicates that regulators may need to assess whether existing rules still cover the entities and activities that can affect consumers.

Ashley Alder, chair of the FCA, said the regulator’s current principles-based and outcomes-focused approach to AI has relied on the Consumer Duty and the Senior Managers Regime. The Consumer Duty requires firms to deliver good outcomes for retail customers, while the Senior Managers Regime assigns responsibility to named individuals for conduct and governance.

Alder said: “As is clear in the report, we need to keep pace with a rapidly changing environment and the principles-based, outcomes focussed 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.”

The review places AI testing, supervisory technology and consumer protection at the centre of the FCA’s next decisions on retail finance. Its recommendations remain proposals for the FCA board and executive to consider.

This story draws on original reporting from Finextra Research.