This submission to the FCA’s Mills review sets out member views on how artificial intelligence (AI) could reshape UK retail financial services over the medium to long term, and what regulators and firms can do now to support responsible innovation.
Looking ahead to 2030 and beyond, members expect the most transformative change to come from agentic and conversational AI that sits at the customer interface, augments human advisers, and enables mass‑market personalisation in banking, investing and insurance. These technologies could materially narrow the UK’s advice gap by providing always‑on, low‑cost support and by increasing adviser productivity, while also shifting how consumers interact with providers and how value is distributed across the market.
The paper also highlights risks that must be managed proactively: accountability and liability across increasingly complex AI supply chains; new prudential and market‑structure dynamics as agents optimise payments and balances across institutions; challenges at the regulatory perimeter as unregulated platforms deliver advice‑like services; and the need for stronger assurance, auditability, bias management and clear consumer disclosures.
TheCityUK supports this forward‑looking FCA review and the UK’s outcomes‑based approach as a competitive advantage.
We encourage targeted clarity on how existing frameworks (such as the Consumer Duty and SM&CR) apply to specific AI use cases, particularly where more complex supply chains and unregulated technology providers are involved. This could include illustrative, non‑binding, scenario‑based examples grounded in clearly defined and evidenced problem statements, to avoid hardening into prescriptive rules. Further structured engagement between the FCA and industry will be needed to identify the priority cases where such guidance would be useful, and to shape its scope and format in a way that preserves the flexibility of the UK’s outcomes-based regime.