Responding to today’s Mills Review, the FCA's examination into the impact of AI on financial services, pension consultancy Broadstone warned that consumers must be protected “from bad pension decisions driven by good-looking AI answers.”
David Brooks, head of policy at Broadstone, said: “Generative AI is excellent at sounding authoritative, but not always at being right.
“When retirement savings are involved, people need to understand that convenience is not the same thing as reliability."
He pointed out that 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.”
It also concluded that AI was likely to become a "defining force" in retail financial services, transforming how firms operate, how consumers make financial decisions and how markets function.
Sam Christopher, proposition director at Quilter, said: “Customer needs must remain at the heart of AI adoption. Firms and regulators should work together to create an environment where innovation can flourish, while ensuring consumers remain protected from the risks of inaccurate information, bias and misuse.”
Sophie Legrand-Green, head of policy: consumer protection & access, The Investing and Saving Alliance (TISA), said: “As AI becomes more personalised and able to act as agents, with tools increasingly able to make recommendations or take actions on a consumer’s behalf, the financial services industry must step up to ensure protections, accountability and redress keep pace with innovation.”
She said responsible AI adoption means clear rules, robust testing and strong governance. “These tools must be tested against real consumer risks, including vulnerability, comprehension, bias and access to redress, before they become embedded in everyday financial decision-making.”
Amal Jolly, CEO of compliance firm Saturn, said: “AI brings new opportunities to close the advice gap, improving the financial lives of millions of adults, but this report shows it also brings risks.
“In financial services, AI is the new Wild West: consumers are left with no protection. Only 9% of people have access to regulated human financial advisers, but 100% of people have access to ChatGPT and other AI platforms.”
The Review was led by Sheldon Mills and builds on the FCA’s existing work on AI. This includes its AI Discussion Paper, AI Sprint, and AI Lab including AI Live Testing and its 'Supercharged Sandbox' supported by NVIDIA.
Running in parallel to the review, the FCA plans to launch an AI good and poor practice publication later this year.