FCA weighs oversight of AI models in financial services

Britain’s Financial Conduct Authority is reviewing the growing influence of large language models on financial decision-making, with Executive Director Sheldon Mills saying the UK should examine whether tools such as ChatGPT, Claude and Gemini should be regulated as general-purpose AI systems. The review found that more than a quarter of UK consumers trust these tools for financial advice, even though protections for regulated financial services do not apply to them.

Mills recommended that the FCA consider within the next three to six months whether to secure and adapt its regulatory perimeter by assessing the scale, nature and impact of general-purpose models that currently sit outside it. FCA Chair Ashley Alder said the regulator needs to keep pace with a rapidly changing environment while maintaining its principles-based, outcomes-focussed approach to AI.

The review also warned of concentration risk as financial firms rely more heavily on a small group of technology providers. A recent survey found that 81 per cent of financial firms globally were adopting AI at some level, with 40 per cent at more advanced stages of scaling or transformation, raising concerns about shared model, cloud and infrastructure dependencies across the financial system.