| Link(s): | Mills Review to consider how AI will reshape retail financial services | FCA Review into the long-term impact of AI on retail financial services (The Mills Review) | FCA |
Context
Perhaps in response to the Treasury Select Committee report published on 20 January 2026, covered in last week’s update, the FCA has launched a review into the implications of advanced AI on consumers, retail financial markets and regulators. The Treasury Select Committee expressed a view that the UK regulators’ current approach to AI in financial services risks serious harm to consumers and the wider system. The review will be led by Sheldon Mills and builds on the FCA’s existing work on AI.
Key points to note and next actions
The engagement paper sets out the scope of the review and invites views from stakeholders including firms, consumer groups, tech providers and academics on 4 key interrelated themes:
- How AI could evolve in the future – future evolution of AI technology, including the development of more autonomous and agentic systems.
- How these developments could affect markets and firms – the future impact of AI, including changes to competition and market structure and UK competitiveness.
- The impact on consumers – future consumer trends, including how consumers will be influenced by AI but also influence financial markets through new expectations.
- How financial regulators may need to evolve – the future regulatory approach – to continue ensuring that retail financial markets work well.
Feedback will shape a series of recommendations to be reported to the FCA Board in summer 2026, informing how the FCA can guide and respond to AI-driven transformation. This will culminate in an external publication.
Mills states that he fully supports encouraging continued innovation and adoption, and that he sees AI as a major opportunity to improve outcomes. He also sets out that the FCA also needs to ensure AI adoption and innovation occurs while ensuring markets work well and consumers are protected.
AI adoption in financial services introduces growing risks, including sophisticated AI-enabled fraud and identity abuse, algorithmic bias, and opaque decision-making. It could also potentially reduce consumer agency and introduce new forms of market concentration or systemic vulnerability. Over the longer term, increasingly autonomous and interconnected AI systems may amplify existing risks and create new ones.
The engagement paper includes commentary on:
- a current inflection point for technology and consumers;
- market structure, firms, and competition; and
- risks, resilience, and regulatory capability.
The deadline for comments is Tuesday 24 February 2026.