FCA Warns of 'Arms Race' to Regulate AI in Financial Services as 20% of UK Adults Adopt AI Models for Money Management

According to Sheldon Mills, an executive director at the UK's Financial Conduct Authority, regulators face an "arms race" to keep pace with artificial intelligence use in financial services. In a report published Monday, Mills warned that the FCA would need greater powers to monitor, detect, and address AI-related risks in the sector, and urged UK authorities to review whether ChatGPT, Claude, Gemini, and other large language models should be subject to regulatory oversight.

Research commissioned by Mills found that one-fifth of UK adults were willing to use AI models for personal financial decisions such as savings and borrowing, despite these services falling outside regulatory coverage with no compensation recourse if problems occur. The FCA recommends conducting a review within three to six months to assess risks from unregulated AI-driven financial services.