UK Financial Regulator Seeks New Powers Over AI Agents

The UK's Financial Conduct Authority published an extensive report on July 6 warning that the pace of artificial intelligence adoption in the financial sector is outrunning regulators' ability to provide oversight. The document, known as the Mills Review, calls for expanding the FCA's powers to also cover the language models used by financial agents.

Sheldon Mills, the FCA's executive director for consumers and competition, presented the report's findings at a conference in London, speaking bluntly about an arms race between technological progress and the regulator's capacity to keep up.

AI will reshape consumers' financial journeys, as they increasingly delegate decisions to AI applications acting autonomously - Sheldon Mills, FCA executive director

Shifting intermediation

A key finding of the report is that agentic AI does not eliminate financial intermediation, it merely shifts it, from brokers, comparison sites and product providers toward the AI agents themselves, along with the platforms and data-access layers that decide what a consumer even sees and can act on.

The FCA stresses that consumer demand for agentic solutions is already growing, making the shift to an agent-based model a credible scenario for the coming years rather than a distant vision.

Risks and benefits

The report acknowledges that AI can help consumers achieve more by doing less, automating the choice of financial products or budget management. At the same time, it warns that the same mechanisms could enable bias, opaque pricing and personalized manipulation of customers who don't understand how an agent is making decisions on their behalf.

The FCA, the Prudential Regulation Authority and the Bank of England have so far said they would oversee AI within existing rules, without creating separate regulation for the technology itself. The Mills Review suggests that approach may need revisiting now that foundation models are starting to act as independent participants in the financial market, rather than merely tools supporting advisers.

Implications for industry and consumers

Industry experts already point to concrete benefits from automation. Maik Taro Wehmeyer, chief executive of Taktile, a company specializing in automating credit decisions, says agentic solutions have cut loan application processing time from two weeks to five minutes, illustrating the scale of change the regulator is trying to get ahead of.

For Polish financial institutions and fintechs, the report carries practical weight, since the UK has long served as a reference point for financial-sector regulation in Europe, and FCA approaches often shape the debate within the European Union, including how the EU's AI rules will be enforced against models used in financial services.

The FCA also says it will itself need to invest in AI-based tools to keep pace with change among the firms it supervises, calling this a necessary condition for effective oversight in the years ahead.

Sources: FCA Seeks More AI Regulation as Agents Take Over Finance (PYMNTS, pymnts.com), AI will 'relocate' intermediation, not remove it, FCA says (Mortgage Solutions, mortgagesolutions.co.uk), UK regulator warns of 'arms race' to keep up with AI use in financial services (Stockpil, stockpil.com)