FCA review on artifical intelligence
FCA launches review as non-human intelligence could surpass human reasoning
The FCA has launched a major forward-looking review into the impact of advanced artificial intelligence on retail financial services, looking out to 2030 and beyond. Led by Executive Director Sheldon Mills, the review will examine emerging technologies such as agentic AI, neuromorphic computing and the possibility of non-human intelligence exceeding human reasoning capabilities.
Prompted by concerns from the Treasury Committee, the FCA is clear that a passive “wait-and-see” approach is no longer sufficient. Instead, it is seeking early engagement from firms, consumer groups and technology providers to understand how innovation could affect consumer outcomes, market integrity and regulatory oversight. Recommendations are expected to be presented to the FCA Board in 2026.
Why this matters: AI and the advice risk gap
As AI becomes embedded in advice journeys, decision support and client communications, the risk of poor or unsuitable advice being delivered at scale increases — particularly where intermediaries rely on opaque models, weak governance, or inadequate human oversight. Errors that once affected individual clients can now be replicated rapidly across entire customer bases.
Where Watchdog fits in
This is where Watchdog plays a critical role. As AI use grows, regulators and principals need stronger, earlier signals of harm. By monitoring real-world events — such as Financial Ombudsman Service decisions, complaints trends, regulatory actions and governance changes — Watchdog helps identify intermediaries where outcomes may be deteriorating long before issues become systemic.
In an AI-driven advice environment, supervision cannot rely solely on internal controls or model assurances. Ongoing, independent monitoring of external indicators is essential to policing intermediaries and protecting consumers.