The Financial Conduct Authority has launched a review examining how advanced artificial intelligence could reshape consumers, retail financial markets, and regulators.
The initiative, led by executive director Sheldon Mills (pictured above), will focus on developments through 2030 and beyond.
The review builds on the FCA's existing AI work, including its AI Lab, AI Live Testing initiative, and Supercharged Sandbox developed in partnership with NVIDIA. Applications for the second cohort of AI Live Testing open this month, with testing scheduled to begin in April.
Current use cases under examination include debt resolution support, financial advice, and complaints handling.
The FCA's focus on "generative, agentic, and emerging forms of AI" signals concern about systems that go beyond responding to prompts. According to industry presentations on AI in insurance, agentic AI refers to systems that "can plan, decide, and act autonomously" and "operate in multi-step workflows" – described as "less chatbot, more intelligent co-worker."
For financial services, this distinction matters. Beth Whelan, chief operating officer at UK life insurance intermediary Reassured, says the real breakthrough will come when AI capabilities are combined with orchestration layers able to handle "very complex workflows," enabling far greater automation in policy setup, underwriting, and claims.
Looking further ahead, Whelan suggests firms will need to design not only for human customers but "for AI agents that will be purchasing on behalf of customers as well."
AI adoption within UK financial services is already extensive. Industry commentary suggests that within a few years, AI will handle most standard risk underwriting, with humans "setting policies and guidelines for the algorithms to follow."
Reassured now uses AI to audit 100 per cent of its two million monthly calls, up from 12 per cent previously, with the system flagging issues for human review. Elsewhere, insurers are deploying AI for claims triage, fraud detection, and summarising medical reports for underwriters.
Industry leaders caution that human oversight remains essential. "You certainly need to make sure there isn't any unintended bias or unintended consequences," according to commentary in a recent industry report.
The review comes amid criticism of UK regulators' approach to AI. A Treasury Select Committee report earlier this month said it does not feel confident the UK financial system is prepared for a major AI-related incident, noting that more than 75% of UK financial services firms now use AI.
The FCA is seeking feedback on four themes: how AI could evolve, its effects on markets and firms, its impact on consumers, and how regulators may need to adapt.
"AI is already shaping financial services, but its longer-term effects may be more far-reaching," Mills said. "By taking a forward-looking view, the review will help the FCA continue to support innovation while promoting the safe and trusted adoption of AI in retail financial services."
The deadline for comments is February 24, with recommendations to be presented to the FCA Board in summer 2026.
