UK consumer finance faces AI and credit reform shifts

UK financial services firms are facing a changing regulatory landscape shaped by wider AI use in consumer finance and proposed reform of the Consumer Credit Act 1974. The developments are expected to affect governance, compliance, customer interactions and risk management, particularly for firms in retail financial services, consumer credit and related markets.

In July 2026, the FCA’s Mills Review set out how AI could reshape UK consumer finance, moving beyond basic digital tools toward highly personalised, “agentic” systems that can act on customers’ behalf. The review identifies opportunities alongside risks including over reliance on AI, bias, uneven access to advanced tools and complex accountability. Firms are expected to focus on governance, transparency, personalisation and maintaining non AI channels for customers.

The Financial Services and Markets Bill 2026 is presented as a major step in reforming the Consumer Credit Act 1974, replacing many prescriptive statutory requirements with a more flexible regime overseen by the Financial Conduct Authority. While modernisation has broad support, House of Lords debates have raised concerns about consumer protection, redress, legal certainty and parliamentary oversight.