“Is the fact that the chat model might be able to respond to prompts and have a conversation something closer to a recommendation, or guidance?” he asked.
But he also said AI could “democratize” finance by widening access to sophisticated services currently only available to the richest customers. He said people earning only £20,000 a year could gain access to financial advice usually only available “to somebody who has got £10mn in savings or assets,” adding: “I mean what’s not to like about that?”
His report recommends the FCA convenes public and private sector groups to develop an “AI-enabled financial capability service” that provides free information and guidance to the British public on their financial choices.
Many financial services companies are already piloting AI agents that can autonomously carry out financial transactions for companies and consumers. Mills, who is leaving after eight years at the FCA, said managers would still need to be accountable for the actions of their AI models. “You need a human on the hook for what they’re doing,” he said.
AI is likely to “amplify” the threat of fraud and cyber attacks, the report says, calling for the technology to be used to defend the system from such threats. “Deepfakes, synthetic identities, and personalized social engineering are taking fraud and cyber risks into a new era and changing how fraud and cyber attacks,” it says.
Mills’ report also recommends boosting the FCA’s powers under the “critical third parties” regime that allows it to supervise key technology providers to the financial sector, such as Anthropic, OpenAI, Amazon, Google, and Microsoft.
The government is yet to decide which Big Tech groups to designate under the regime, which allows regulators to impose more robust disclosure requirements, including annual self-assessments and “scenario testing” of their ability to withstand severe disruptions.
The report says the FCA could also seek extra powers under the “designated activities regime” that allows it to regulate specific activities without requiring the firms carrying them out to be authorized.
The FCA board is due to discuss the report from Mills before deciding how to respond to its recommendations.
The watchdog has been criticized by some politicians for a 12-week contract it agreed with US tech group Palantir to test whether its AI systems can help fight financial crime. Some MPs have raised concerns the contract could give US authorities access to sensitive UK financial information. The FCA and Palantir have denied this. Mills declined to comment on the Palantir contract.
This story has been amended to clarify that research commissioned by Sheldon Mills found that a fifth of UK adults were open to using AI models to make financial decisions for them.
© 2025 The Financial Times Ltd. All rights reserved. Not to be redistributed, copied, or modified in any way.
