UK regulator calls for new powers to oversee AI in finance

A fifth of UK adults are open to using AI for financial decisions, such as savings or borrowing, without regulatory protection, according to a landmark review by the Financial Conduct Authority (FCA) Source: The Guardian. Executive Director Sheldon Mills warns of an “arms race” for regulators to keep pace with AI adoption Source: Ars Technica.

Key recommendations

• Review the regulatory perimeter within three to six months to decide whether general-purpose AI models like ChatGPT, Claude, and Gemini should be regulated when used for financial advice Source: The Next Web.
• Boost the FCA’s powers over critical third parties, including AI firms and cloud providers, to manage concentration risk Source: The Guardian.
• Embrace AI internally to monitor, detect, and tackle risks as the industry shifts toward agentic, continuous automation Source: Cointelegraph.

Risks highlighted

The review warns that over-reliance on a few tech providers could create system-wide failures, as 81% of financial firms globally are adopting AI Source: Channel News Asia. "Hyper-personalization could help better match products to needs, but also enable bias, opaque pricing, and personalized manipulation," the report states Source: Ars Technica. The FCA also notes that consumers have no recourse if an unregulated AI model gives poor advice.