UK regulator calls for review of ChatGPT, Claude, Gemini as financial advice tools

The UK's Financial Conduct Authority (FCA) Executive Director, Sheldon Mills, has called on British regulators to review whether general-purpose AI models such as ChatGPT, Claude, and Gemini should fall under financial regulation, as they increasingly influence consumers' financial decisions.

Mills also stressed the urgent need for the existing regulatory framework to evolve as financial firms become increasingly reliant on a handful of technology providers, creating potential system-wide risks. He pointed to AI tools such as ChatGPT, Claude, and Gemini, which many consumers already use for financial advice, despite the fact that the regulatory protections applicable to licensed financial services do not currently extend to these AI platforms.

Mills has proposed a timeline of three to six months for the FCA to assess whether it should "secure and adapt" the regulatory perimeter by reviewing the scale, nature, and impact of general-purpose AI models that currently operate outside existing financial regulations.

Concentration risk

A recent survey found that 81% of financial firms globally have adopted AI at some level, with more than 40% already in advanced stages of deployment or large-scale transformation. While most current applications remain focused on lower-risk back-office operations, firms in the UK are increasingly deploying AI in customer-facing roles, including handling customer complaints and providing investment guidance.

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Mills' review also warned that the growing adoption of AI across the financial sector could leave firms heavily dependent on a small number of technology providers for critical operations, increasing concentration risk and raising concerns about the resilience of the financial system.

(With Inputs from Reuters)