The UK’s financial watchdog is sounding the alarm. It wants more muscle to handle AI risks in finance.
The Financial Conduct Authority (FCA) drew up the Mills review, mapping AI’s impact on financial services by 2030. The report reveals firms are shifting from human advice to AI-driven tools for everyday money matters. This shift promises to make financial advice cheaper and accessible, especially for lower-income groups.
But AI is a double-edged sword. It raises fraud, cyber threats, and consumer harm risks. The FCA warned governments and regulators to step up. It called for expanded powers to oversee not just banks but also critical tech players like AI firms and cloud providers. The watchdog wants direct authority over these tech companies to keep tabs on emerging risks.
“AI is likely to become a defining force in retail financial services,” the FCA said. Sheldon Mills, FCA’s executive director, put it bluntly: “It is an arms race.” He insists regulators must adopt AI internally to detect and fight new threats.
Consumers are warming to AI, too. About 11 million Britons—one in five—are open to using AI for financial decisions. Yet many still rely on older financial products running on outdated IT systems. The FCA urges firms to improve value for these customers. Some progress is visible, but legacy issues remain stubborn.
Meanwhile, fraud losses are a moving target. Last year, authorised push payment (APP) fraud hit £576.4 million, a 19% jump. But mandatory reimbursement rules, effective October 2024, are turning the tide. Banks must repay victims unless customers were grossly negligent. The reimbursement cap stands at £85,000 per transfer.
Early data, published since October 2023, show APP fraud losses fell by £73 million a year. Frontier Economics credits improved reimbursement with delivering a clear consumer benefit. “The evidence is clear – APP reimbursement is working,” said David Geale.
Fraud remains a menace. “Fraud operates on an industrial scale, causing serious harm to consumers and businesses,” warned Ruth Ray. The FCA’s push for AI oversight is partly to counter this growing threat.
Beyond finance, the UK government is eyeing a $110 billion media deal. Paramount Skydance’s takeover of Warner Bros. Discovery faces possible intervention. On 30 June 2026, officials flagged concerns about the deal’s impact on competition.
In a separate move, the Competition and Markets Authority (CMA) launched an inquiry into childcare availability and affordability in England. The sector, worth about £14 billion annually, serves 1.6 million places through 53,000 providers for children up to four years old.
Taxpayers funded childcare with £8.91 billion last year. Private equity doubled its share of childcare places to 8% by 2024. Meanwhile, places from not-for-profit providers dropped 8%, and partnership providers’ places plunged 28% since 2018. Childminders shrank by 39% between 2018 and 2025.
“Early years education and childcare is a lifeline for many families,” said CMA’s Sarah Cardell. The investigation aims to ensure families get a fair deal amid a shifting market.
The FCA’s call for tougher AI regulation is part of a wider push to modernize UK oversight. The goal is clear: protect consumers before AI’s risks spiral out of control. The watchdog is not asking for favors—it’s demanding tools for a digital future that’s already here.
Based on
- Boost City regulator’s powers to help protect UK consumers from AI, says watchdog — theguardian.com
- Firms must do more for customers in older pensions, says FCA | The Independent — independent.co.uk
- APP fraud losses have fallen by an estimated £73m per year, says report | The Independent — independent.co.uk
- UK government likely to challenge Paramount takeover of Warner Bros. Discovery – Business – France 24 — france24.com
- Competition watchdog opens probe into childcare sector | The Independent — independent.co.uk
