Response to UK FCA Mills Review: AI in Retail Financial Services

CFA Institute supports the FCA's technology-neutral, outcomes-focused approach and its intention to anchor AI supervisory expectations within existing conduct and governance frameworks, rather than creating a standalone regime.

The critical issue is operational clarity: practical articulation of how these frameworks apply as AI moves along the assistive–autonomous spectrum.

• The regulatory perimeter should follow function, not technological form. Regulatory treatment should be determined by what an AI does for consumers in practice, rather than how it is technically constructed or labelled. A technology-neutral approach remains appropriate.
• The Consumer Duty is the appropriate foundation, but requires AI-specific articulation. The Duty’s four outcomes offer sufficient architecture. What is needed is clearer guidance on how those outcomes apply to AI-driven retail-facing services.
• Proportionality matters. We recommend a proportionate, tiered governance framework mapping to the assistive–advisory–autonomous spectrum, with stricter standards and gating conditions as autonomous, consumer-facing discretion increases.
• Accountability requires genuine understanding. A gap between nominal SM&CR obligations and substantive comprehension of AI systems presents supervisory risks.
• Continued engagement with IOSCO and FSB is essential to ensure international alignment, given the cross-border nature of AI infrastructure and capital flows.
• Hybrid talent and professional standards are core infrastructure. Responsible AI adoption depends on professionals who combine technical fluency with fiduciary judgement and market expertise. Developing such hybrid capacity within firms and regulators will be critical to the UK’s competitiveness in an AI-mediated financial system.