FCA says Consumers need Protection from Poor AI Driven Decisions

Consumers must be protected from poor pension decisions driven by overly‑confident or overly‑persuasive AI answers.

Responding to today’s Mills Review — the FCA’s examination of the impact of AI on financial services, consumers need protected and as we continue to build our own AI Financial Planning Tools, we are following the Mills Review closely.  We recognise the significant benefits AI can bring to engagement and understanding, but we urge caution over its rapid spread into pensions, where the stakes are uniquely high.

Generative AI often appears structured, informed and up to date, yet it is not always right. When retirement savings are involved, convenience is not the same as reliability. Pensions are complex, long‑term arrangements where mistakes can have lasting consequences. AI should be a starting point for consumers — not a substitute for scheme information, professional guidance or regulated financial advice.

The Review highlights that AI could increase risks relating to fraud, cyber security, consumer harm and market concentration. It also concludes that AI is likely to become a “defining force” in retail financial services, reshaping how firms operate, how consumers make decisions and how markets function.

Consumer needs must remain at the centre of AI adoption. Innovation should flourish, but firms and regulators must work together to ensure consumers are protected from inaccurate information, bias and misuse. As AI becomes more personalised and more capable of acting as an agent — making recommendations or even taking actions on a consumer’s behalf — advisers must step up to ensure protections, accountability and routes to redress keep pace with technological change.

AI tools must be tested against real consumer risks — including vulnerability, comprehension, bias and access to redress — before they become embedded in everyday financial decision‑making. Right now, AI is the new Wild West: consumers are exposed to tools with no regulatory protection. Only 9% of people have access to regulated human financial advisers, yet 100% have access to ChatGPT and other AI platforms.

The Review rightly recognises the need to evolve the regulatory perimeter as AI‑enabled financial services develop, supporting consumer confidence while maintaining a level playing field for regulated firms.

Led by Sheldon Mills, the Review builds on the FCA’s existing work on AI, including its AI Discussion Paper, AI Sprint, AI Lab, AI Live Testing and its ‘Supercharged Sandbox’ supported by NVIDIA. The FCA plans to publish AI good and poor practice guidance later this year.

Comment

We will continue to develop our product offering with one eye on the FCA and the other on building systems that support safe, transparent and consumer‑centred innovation.