Boost City regulator’s powers to help protect UK consumers from AI, says watchdog

The FCA Mills review found that firms already pivoting away from human-led interactions towards AI-enabled activity. Photograph: Dado Ruvić/Reuters View image in fullscreen The FCA Mills review found that firms already pivoting away from human-led interactions towards AI-enabled activity. Photograph: Dado Ruvić/Reuters Boost City regulator’s powers to help protect UK consumers from AI, says watchdog FCA’s review into how tech will reshape financial services warns about amplified risks of cyber-crime and fraud Business live – latest updates Ministers have been urged to toughen the City regulator’s powers to protect consumers against the potential risks of AI, according to a landmark review. The Financial Conduct Authority’s (FCA) Mills review, which looked at how AI will reshape financial services from 2030 onward, found that companies are already starting to shift from human-led activities towards AI-enabled services for everyday consumers. While it found that the move could actually support customers, and make financial advice more accessible to lower-income households, it also ramped up the risk of fraud, cyber threats and harm to consumers. Anthropic to share Mythos cyber flaw findings with global finance watchdog Read more “AI is likely to become a defining force in retail financial services, transforming how firms operate, how consumers make financial decisions and how markets function,” the FCA said. “While AI has the potential to improve access, personalisation and efficiency, it could also amplify risks associated with fraud, cybersecurity, consumer harm and market concentration.” The report, which was led by one of the FCA’s executive directors, Sheldon Mills, made a series of recommendations, including having the FCA adopt its own AI-enabled model to supervise firms, and asking the government to “boost the FCA’s existing powers”. That could mean expanding its powers over “critical third parties”, such as AI firms and cloud providers and giving the FCA “direct powers” to regulate tech companies to prevent digital monopolies, boost competition and protect consumers. In an interview, Mills told the Financial Times that regulators needed to embrace AI internally to keep up with the “speed, pace and scale of change” as well as “monitor, detect and tackle the risks”. “It is an arms race,” Mills added. Mills said in a statement: “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.” The review was first announced in January this year, as part of efforts to understand how AI could evolve in the future, how those developments could affect consumers, markets and firms, and how financial regulators may need to evolve in response. The FCA found that a fifth of people across the UK, equ