Industry voices, including governance-focused experts, stress the need for governance and accountability aligned with Consumer Duty as AI models evolve and embed in customer interactions.

Risks highlighted include biased or misleading advice, reduced consumer understanding, loss of agency, potential unconscious manipulation, and a shift in market power toward AI firms that control interfaces and data.

Current use of retail AI is mainly as an assistant, but as trust grows, consumers may delegate more decisions to autonomous agents within defined limits.

The regulator is assessing whether existing frameworks—Consumer Duty, operational resilience, and the Senior Managers and Certification Regime—adequately manage AI-related risks and whether policies should adapt to new AI realities and potential shifts in market power toward AI and Big Tech.

The review will exclude wholesale markets but will consider spillover effects that could affect the broader financial system.

Experts urge regulators to get ahead of rapid AI advances, stressing the need for oversight frameworks and highlighting gaps between regulatory weight and the pace of AI development.

Commentary suggests Consumer Duty helps, but further guardrails may be needed where AI intersects with financial products and services.

CEO Amal Jolly argues AI can boost efficiency and access to financial advice but cautions about risks when consumers use AI tools directly for advice, including potential inadvertent guidance from broad language models.

The UK Financial Conduct Authority has opened a review into AI’s long-term impact on retail financial services, seeking feedback on how AI could evolve by 2030 and what it means for consumers, firms, and markets.

Executive director Sheldon Mills says the inquiry must balance pushing innovation with protecting consumers, noting opportunities in personalization and efficiency while flagging risks such as AI-enabled fraud, algorithmic bias, opaque decision-making, and erosion of trust.

Regulators will monitor systemic risks, operational resilience, and dependencies on major cloud and AI infrastructure providers.

Mills notes rapid tech advances could bring widespread use of agentic AI, neuromorphic computing, and quantum capabilities, alongside growth in digital finance technologies like blockchain, smart contracts, tokenization, and digital assets.