The UK Financial Conduct Authority (FCA) has launched the Mills review and a call for input on the long‑term impact of advanced AI on retail financial services, looking to 2030 and beyond.
The engagement paper groups questions into four themes:
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The evolution of AI technologies (including increasingly autonomous, agentic systems)
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Potential effects on firms and market structure
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Expected consumer trends
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The future regulatory approach (including whether Consumer Duty and the SMCR remain fit for purpose)
Wholesale markets are not in scope, though relevant spill‑overs in those markets to retail may be considered. Feedback is invited by late February 2026, with recommendations to the FCA Board and a public report expected in the summer.
Separately, the Government has appointed two Financial Services AI Champions – Harriet Rees (Starling Bank) and Dr Rohit Dhawan (Lloyds Banking Group). Their brief is to advise HM Treasury on high-impact use cases and to engage with regulators, which should help bring practical insight to the Mills review and any SMCR guidance on AI governance. The appointments run to 30 September 2026 (subject to extension).
Whilst the FCA has not to date suggested specific rules to address AI, and the UK Government is yet to introduce omnibus AI legislation, the above developments may mark a shift in approach. However, in the meantime the direction of travel (as with many FCA priority areas) is towards stronger governance and accountability for AI in retail markets. Firms should expect closer scrutiny of systems and controls, model oversight and testing where AI influences product design, distribution, eligibility or redress.
In the near term, practical steps include mapping AI use‑cases, clarifying senior manager responsibilities, evidencing challenge and testing, and aligning consumer outcomes with the spirit of the Consumer Duty. This reflects a broader supervisory trend towards robust, evidence‑based governance and clear, defensible disclosures when technology materially affects customer outcomes. Whilst the review is focused on retail markets, firms in the wholesale markets should ensure robust governance in relation to their use of AI in any event.
Lily Kalati, Paralegal, also contributed to this article.
