Sheldon Mills' review into AI and retail financial services reported last week with some dramatic findings and recommendations. Among other things he wants a swift review of Large Language Models, and see a likely revolution for regulator and regulated.
The FT's take is that the FCA has warned of ‘an arms race’ to keep up with AI use in financial services. Among other things Mills is worried that the two regulations the FCA has chosen to use in regulating AI - Consumer Duty and the Senior Managers regime may be undermined because firms will find it increasingly difficult to evidence compliance as AI gets more autonomous.
General news website First Post gets close to the nub of the matter noting that the 'UK regulator has called for a review of ChatGPT, Claude, Gemini as financial advice tools'.
On this point, Mills was conducting the review as the executive director at the FCA. However has now left and the matter is with the board to decide whether to conduct an immediate review. Mills suggested it start in the next three to six months.
This was Octo Member's take - Sheldon Mills acknowledges the huge risk to regulated advice and regulation itself from LLMs and calls for an urgent FCA review.
Health and Protection hones in on the Mills' view that 'AI can close protection gap, but hyper-personalisation risks making market more opaque'.
This is the take from Regulation Tomorrow a website published by Norton Rose Fulbright.
It is very neat on new consumer journeys in its summary -
"New consumer journeys: AI is likely to transform how consumers engage with financial services, with increasing use of AI agents that act on their behalf. Over time, these systems could move beyond providing information and recommendations to delivering ongoing financial management within agreed parameters. This has the potential to improve outcomes, address persistent issues such as low switching rates, advice and protection gaps, and better support those with lower financial capability. However, risks remain, including bias, opaque pricing and personalised manipulation. Consumer trust, control and the ability to understand and challenge AI-driven decisions will be critical. While unequal access could widen financial inclusion gaps, well-designed AI services could significantly improve outcomes for many consumers."
Interesting that this week, Ian Else of 4 Financial Planning says he is looking at cutting his advice fees because of AI. He talks to Citywire New Model Adviser.
In other regulatory news, the FCA notes that the regulator is improving product governance but gaps remain. FTAdviser reports.
Söderberg & Partners had bought platform and advice network Benchmark from Schroders, as Portfolio Adviser reports.
It had been suggested that Openwork were interested.
But the new Swedes on the block are also causing headaches elsewhere with suggestions that SJP is about to lose a very big partner firm Sovereign Wealth to Söderberg. London Financial News has the scoop.
The upcoming changes to inheritance tax on unused pensions are triggering a ‘seismic shift’ in adviser conversations with clients, Next Wealth research shows reported in Money Marketing.
The research shows that with implementation being less than a year away, advisers are dealing with client hesitation, emotional reactions and delayed decision‑making that are increasing both workload and risk.
Advisers clearly have a lot on their plate.
