Industry commentators have welcomed the proposals in the Mills Review – such as adapting the regulatory perimeter – but expect the regulator to now undertake a substantial amount of work.
Commenting on the FCA’s landmark review on how AI is reshaping financial services, Maria Fritzsche, Senior Policy Adviser at PIMFA said consumers need confidence that AI-driven decisions are transparent, explainable and subject to appropriate oversight.
“The review rightly recognises the need to consider how the regulatory perimeter should evolve as AI-enabled financial services develop, helping to support consumer confidence while maintaining a level playing field for regulated firms,” she said.
Norton Rose Fulbright’s global head of financial services Jonathan Herbst said the report shines a light on a fundamental regulatory question.
“If consumers increasingly rely on AI systems provided by a small number of major technology companies to make financial decisions, how should existing regulatory frameworks adapt?
“Mills is not proposing an immediate crackdown on Big Tech, but he is asking whether the rules need to evolve to reflect how financial services are actually being delivered. That’s a big question for policymakers and one that will only become more pressing as AI adoption accelerates.”
Norton Rose Fulbright partner Matthew Gregory added: “Mapped against an AI autonomy spectrum, the report identifies a series of pressure points in the current regulatory framework, with operational resilience and the regulatory perimeter suffering pressure points in the near term.
“As a result, the report calls for the FCA to consider undertaking an urgent review to secure and adapt the regulatory perimeter, to consider greater coordination between authorities and to lay the foundations for agentic finance – effectively building the structures to ensure that the regulatory framework remains fit for purpose as agentic models advance.”
He added this means a substantial new phase of work is expected to be undertaken by the FCA, with potentially significant implications for the landscape of all retail financial services in the months and years ahead.
John Allan, director, innovation and operations unit and director, engine at the Investment Association, said: “The FCA’s commitment to secure the perimeter, scale up its AI Lab and develop AI‑enabled supervisory tools is especially important.
“The Investment Association and our members stand ready to work with the FCA to translate these proposals into practical expectations and tools, so that firms can keep pace with technological change while maintaining the trust on which long‑term saving and investing ultimately depends.”
However, Greg Davies, head of behavioural finance at Oxford Risk, said the advice gap won’t close without genuine client understanding built into systems.
“The advice gap will not be closed by giving everyone a plausible-sounding chatbot. AI only improves outcomes if it is built around a genuine understanding of the client,” he said.
“As AI moves from recommending to acting, firms will need to evidence more than just efficiency. They will need auditable suitability logic, behavioural insight and clear limits on what AI can do.
“Done well, agentic finance could help people make, understand and stick with better decisions. Done badly, it could scale confusion faster than ever.”
Marianna Hunt, personal finance specialist at Fidelity International, said initiatives such as Targeted Support need to work in tandem with regulations.
“We know there is a clear advice gap in the UK. Many people are trying to equip themselves with the knowledge to make good financial decisions, but the quality and reliability of online information varies widely,” she said.
“This is exactly why it is so important that financial institutions are empowered to do more to support consumers. Measures such as the FCA’s new Targeted Support regime will enable providers to offer clearer nudges and guidance at key moments, helping people make better long-term decisions and avoid harmful actions or inactions.
“By combining high quality guidance with the right regulatory framework, we can help to ensure that people feel confident and informed – whether they are using traditional advice channels or exploring new digital tools.”
