Sheldon Mills’ artificial intelligence (AI) review will consider the evolving fraud threat from the technology on retail financial services, including AI-enabled advisers and intermediaries.
It will ask what good outcomes might mean where consumers are increasingly giving AI agents more control in their finances but may not be able to understand if these bots are acting in their interests.
Mills, who is executive director of the Financial Conduct Authority (FCA), is leading the regulator’s exploration of the long-term impact of AI on retail financial services which will include the future evolution of the technology.
This includes a question asking how AI-driven fraud could evolve as consumers increasingly delegate decisions to AI, and what would this mean for consumer agency, harm, and protection in retail financial services.
Highlighting the risk coming with new technologies, Mills said: “AI adoption in financial services also introduces growing risks, including sophisticated AI-enabled fraud and identity abuse, algorithmic bias, and opaque decision-making.
“It could also potentially reduce consumer agency and introduce new forms of market concentration or systemic vulnerability.“
Considering good outcomes
In its outline for the review, the FCA said: “We know though that other harms could emerge, such as reliance on unregulated AI for guidance or advice, vulnerability to mis-selling, and risks created by model bias or hallucination.
“Indeed, as consumers delegate more decisions to AI-enabled intermediaries, new forms of AI-driven fraud, manipulation and laundering may emerge, exploiting synthetic identities, deepfake interactions and automated criminal ecosystems,” it added.
“We will consider what good outcomes might mean in a world where consumers increasingly delegate financial decisions and their ability to assess whether their AI agents are acting in their interests may be limited.”
