FCA urged to review AI chatbot financial advice
The Financial Conduct Authority (FCA) received a recommendation on Monday to consider regulating large language models (LLMs) such as OpenAI’s ChatGPT, Anthropic’s Claude and Google’s Gemini because of their increasing influence on consumer financial decisions. FCA executive director Sheldon Mills published a review that highlighted system‑wide risks arising from the industry’s reliance on a small number of technology providers.
The review disclosed that more than 25 % of UK consumers trust these AI tools for financial advice, while the majority remain unaware that the consumer protections applicable to regulated financial services do not extend to such AI‑driven services. In the United Kingdom, providing financial advice is a regulated activity reserved for authorised businesses; AI tools are expected to limit themselves to generic guidance. Mills warned that personal recommendations from a chatbot could blur this regulatory boundary, and continuously adaptive advice could effectively constitute regulated advice.
Mills recommended that the FCA conduct a review within three to six months to determine whether the regulatory perimeter should be adjusted, examining the scale, nature and impact of AI models that currently operate outside existing rules. He emphasized the need to assess the potential for these models to deliver advice that resembles that of authorised firms.
The article notes that regulators worldwide are intensifying scrutiny of AI’s impact, citing cyber and operational risks linked to frontier AI models such as Anthropic’s Mythos and the challenges posed by agentic systems capable of acting with minimal human intervention.
This article was generated with the support of AI and reviewed by an editor.