Around a third of consumers are using artificial intelligence for pensions and investments advice, according to a comprehensive report into the impact of artificial intelligence in financial services, conducted by the Financial Services Authority.
Led by FCA executive director Sheldon Mills and commissioned by the FCA Board, the Mills Review is the first work of its kind initiated by a regulator globally.
Its report found that, of the five percent of 5000 survey respondents who looked for pension advice in the last twelve months, 29 per cent were using AI. This was the third highest amount of the categories studied, behind investing in shares (34 per cent), and debt advice (45 per cent).
The report recommended that the FCA should consider conducting a review within three to six months, which should examine how consumers use AI. This report should also examine the risks of consumer harm, including AI’s ‘autonomy spectrum’, and the potential for regulatory impact.
The report also warned that as AI becomes more embedded in consumer journeys and commercial models evolve, “functionally similar” outputs to regulated activity may become established outside legal perimeters before oversight adapts.
Another key action urged within the report was that financial services bodies should come together under the Wider Implications Framework, whose members include the Financial Ombudsman Service, the Financial Services Compensation Scheme, The Pensions Regulator and Money and Pensions Service, to consider the impact of AI on its cross-regulator work programme.
David Brooks, head of policy at consultancy Broadstone, says: “Pensions are complex, long-term financial arrangements where mistakes can have lasting consequences. While AI has a role to play in improving engagement and understanding, consumers need to treat it as a starting point, not a substitute for professional guidance, scheme information or regulated advice.”
However, the report also noted that if deployed responsibly, AI-enabled support could help consumers make more informed decisions regarding savings, pensions, mortgages, debt, insurance and protection products.
