- Mills review FCA highlights, that AI could change the financial services sector by 2030, potentially enabling risks to be addressed with greater efficiency.
- The report proposes that the FCA should use AI-enabled models to “boost the FCA’s existing powers,” by strengthening “critical third parties” with “direct powers” for regulating technology companies.
- In materials provided by Yonder Consulting: 20% of respondents (about 11 million people across the UK) could be willing to use AI for processing financial risks automatically between the lines, and then to use the “assistive” approach.
The UK Financial Conduct Authority (FCA) financial regulator has adopted recommendations from the Mills review on how to use AI to support specific aspects of oversight of financial services. The report notes that, according to the Mills review, which FCA commissioned, AI could change the financial services sector by 2030.
The materials also point out that companies may benefit from using AI-instrumentation to serve the oversight of financial services. However, the author notes that it is possible to improve the efficiency of risk management and to build AI models to support the work of regulators. At the same time, there is a risk that AI could be used to bypass oversight and increase the likelihood of financial risks.
In addition, the report states that FCA, in its media materials, says that AI may be used to strengthen oversight of financial services by changing the way companies are regulated, while also reducing the financial risks of companies. The report also states that AI can be used to identify risks, and to help regulators and companies better understand and manage them.
According to the Mills review, which was prepared by FCA executive director Sheldon Mills, the report states that FCA should use AI-enabled models to identify risks for companies, as well as to strengthen “critical third parties” with “direct powers.” The materials also say that the “critical third parties” could be regulated by AI-firms, and that the FCA “direct powers” could help regulate technology companies by preventing financial risks.
Based on the data, in addition to 11 million people in the UK, who make up “a fifth of people across the UK,” it could be possible to use AI to automatically process financial risks, which would reduce the likelihood of financial risks. At the same time, the report says that AI models may not replace financial regulators, but can complement them by helping to identify and prevent risks.
The materials also describe the results of a survey conducted by Yonder Consulting, which was carried out among 5,000 people working in financial services in the UK. Notably, 20% of respondents—about 11 million people across the country—say they would use AI, provided it is used for “assistive” purposes, while 16% of people who say they would use AI for “assistive” purposes but not for other purposes. The materials also note that the survey results show that AI can be used to support risk management in financial services.
The materials also mention that the report discusses AI-model Mythos, which was developed by the American technology company Anthropic. The materials state that Anthropic believes it is possible to reduce risks for organizations and to help prevent the spread of financial risks by AI.
Following publication of FCA’s recommendations, it has been stated that the regulator is considering how to use AI in oversight. The report also states that Sheldon Mills recommends that FCA use AI to identify risks for companies, and that the regulator should also strengthen “critical third parties” with “direct powers” to regulate technology companies by preventing financial risks.