Britain should consider regulating AI models, FCA official says

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LONDON, July 6 : Britain should review whether large language models such as ChatGPT, Claude and Gemini should be regulated as general-purpose AI tools as they increasingly influence consumer financial decisions, a senior official said on Monday. 

Financial Conduct Authority Executive Director Sheldon Mills also said the existing rulebook will need to evolve as firms' reliance on a handful of tech providers creates potential system-wide risks.

Mills' review of the impact of AI on the financial sector comes as regulators globally contend with 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 rollout of agentic systems capable of acting with limited human intervention.

He highlighted the growing use of general-purpose large language models by consumers. The review 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, despite limited awareness that the protections applied to regulated financial services do not extend to those services.

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OpenAI, Anthropic and Google were not immediately available for comment.

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 general-purpose models that currently sit outside it.

"We need to keep pace with a rapidly changing environment and the principles-based, outcomes focussed approach we’ve taken on AI", said Ashley Alder, Chair of the FCA.

CONCENTRATION RISK

A recent survey found that 81 per cent of financial firms globally were adopting AI at some level, with 40 per cent at more advanced stages of scaling or transformation.

While most use cases remain concentrated in lower-risk back-office functions, British firms are increasingly deploying AI in customer-facing roles, including handling complaints and providing investment guidance. 

Mills' review also 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.

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