Britain’s financial regulator has been urged to consider regulation of large language models such as ChatGPT, Claude and Gemini because of their growing influence on consumer financial decisions.
In a review commissioned by the Financial Conduct Authority and published on Monday, the watchdog’s executive director, Sheldon Mills, also highlighted how companies’ reliance on a handful of technology providers introduces potential system-wide risks.
Regulators globally have begun to focus more keenly on the impact of AI, from cyber and operational risks associated with frontier AI models such as Anthropic’s Mythos to the challenges posed by the agentic systems capable of acting with limited human intervention.
Mills’ review of the impact of AI on the financial sector found that more than a quarter of UK consumers trust tools such as OpenAI’s ChatGPT, Anthropic’s Claude and Google’s Gemini for financial advice, with only limited awareness that protections applied to regulated financial services do not extend to those AI services.
OpenAI, Anthropic and Google representatives were not immediately available for comment.
Financial advice is a regulated activity that can only be provided by authorised businesses, so AI should not offer more than generic financial guidance. However, Mills said that personal recommendations by a chatbot could blur the boundary and continuous and adaptive recommendations may start to look like regulated advice.
Mills recommended that the FCA consider within the next three to six months whether to “secure and adapt” the regulatory perimeter by reviewing the scale, nature and impact of AI models that sit outside it.
Jonathan Herbst, global head of financial services at law firm Norton Rose Fulbright, said Mills was not proposing an immediate crackdown but was asking whether the rules need to evolve to reflect how financial services are being delivered.
“That’s a big question for policymakers and one that will only become more pressing as AI adoption accelerates,” Herbst said.
The FCA said it was the first regulator globally to study the impact of AI on financial services, though the watchdog is not bound to act on any recommendations made.
A recent survey found that 81% of financial firms globally were adopting AI at some level, with 40% at more advanced stages.
While most use cases remain concentrated in lower-risk back-office functions, British companies are increasingly deploying AI in customer-facing roles such as complaints handling and investment guidance.
Mills’ review warned that widespread adoption of AI by the financial sector could leave firms dependent on a small number of technology providers for critical operational capabilities.
Shared reliance on the same models, cloud providers or technology infrastructure could create correlated behaviour, herding and common points of failure across the financial system, it said.
In a speech last week, Bank of England deputy governor Sarah Breeden signalled for the first time the need for bespoke AI regulation to contain risks to the financial system posed by increasingly capable agentic systems.
“Our frameworks were not built to contemplate autonomous agents, and relying on a human in the loop for all agent actions is unlikely to be realistic,” Breeden said.
Published – July 07, 2026 09:33 am IST
