UK regulator urged to tighten rules on AI financial advice

The Financial Conduct Authority published the final Mills Review on July 6 after launching it on January 27, 2026. Britain’s financial regulator is now weighing whether AI tools such as ChatGPT, Claude and Gemini sit too close to consumer finance to stay outside a tighter rulebook. The work will shape recommendations to the FCA Board in summer 2026.

Sheldon Mills’ review looks at how AI could reshape retail financial services through 2030 and beyond, including how consumers may be influenced by it, how markets and firms could change, and how regulators may need to adapt. The FCA does not plan to introduce extra AI-specific rules and instead will rely on existing principles-based regulation, including the Consumer Duty. That stance now meets a fast-moving market in which firms are already using large language models for customer service, complaints handling and investment guidance.

The regulatory fault line is whether a chatbot’s answer is just generic information or crosses into a regulated personal recommendation. Under FCA handbook rules, a personal recommendation is one made to someone as an investor or potential investor that is suitable for that person or based on that person’s circumstances, and the handbook page on that definition was last updated on March 27, 2026. A chatbot that begins with broad educational content can easily drift into individualized guidance, especially when users ask where to put savings or how to choose investments.

That risk is not limited to bad advice. The final review flags AI-enabled fraud and identity abuse, algorithmic bias, opaque decision-making, reduced consumer agency, new forms of market concentration and systemic vulnerability. Concentration is a particular worry because many firms depend on the same small group of technology providers, raising the chance that one model, cloud service or tool failure could spread across the market.

In its 2026 global survey, the Cambridge Centre for Alternative Finance found that 81% of financial services firms are using AI at some level, and 40% say they are at advanced stages. YouGov found in November 2025 that 50% of Britons thought financial providers were using more AI than a year earlier, but only 19% were comfortable receiving AI-generated financial advice, while 83% said human support matters when choosing a provider.