The Financial Conduct Authority (FCA) said on Monday that the regulatory framework for financial services should be examined to determine whether general-purpose large language models - such as ChatGPT, Claude and Gemini - ought to be brought within its remit, given their expanding role in consumer financial decision-making.
Regulatory concern and next steps
FCA Executive Director Sheldon Mills warned that the current rulebook will need adjustment as more financial firms come to depend on a concentrated set of technology providers. That reliance, he said, could translate into risks that affect the broader financial system.
The FCA's review found that more than a quarter of UK consumers place trust in tools like OpenAI's ChatGPT, Anthropic's Claude and Alphabet's Gemini for financial advice. The regulator also identified a gap in consumer awareness - users often do not realize that the protections afforded to regulated financial services do not extend to these AI-driven services.
Mills urged that the FCA consider, within a three to six month window, whether to formally reassess and potentially expand the regulatory perimeter to include general-purpose models that currently sit outside regulatory oversight.
Chair's comment
FCA Chair Ashley Alder emphasized the need for regulatory approaches to keep pace with rapid technological change, saying: "We need to keep pace with a rapidly changing environment and the principles-based, outcomes focussed approach we’ve taken on AI."
Adoption across the industry
The FCA pointed to a recent survey showing 81% of financial firms worldwide are using AI in some capacity, and that 40% of firms reported they were at more advanced stages of scaling or transformation. While AI use remains concentrated in back-office functions for many institutions, British firms are increasingly deploying AI in customer-facing roles, including handling complaints and offering investment guidance.
Systemic risks from concentration
The review raised a specific warning about the potential for widespread AI use to produce dependencies on a limited number of technology providers. If multiple firms rely on the same models, cloud services or technology infrastructure, the FCA said this could lead to correlated behaviours and shared points of failure across the financial system.
This review signals a potential shift in regulatory thinking about where the boundary should lie between regulated financial services and general-purpose AI tools that consumers increasingly use for financial decisions.