Module 1 of 2 · 45 minutes
No new rulebook does not mean no rules
By the end of this module you will be able to
- State the FCA's approach to AI
- Apply the four Consumer Duty outcomes to a use of AI
- Explain where accountability sits
- Recognise the risk to customers in vulnerable circumstances
- Say what the Mills Review recommended
Work through it
1 interactive for this module, built on the WAJD Teach engine. Nothing moves until you ask it to, and every one has a written version if you would rather read it.
Watch: Emma and George talk it through
3 minutes. Captions are on, and the same conversation is written out in full below. The voices are computer generated.
Emma George, my compliance officer says the FCA has no AI rules, so we can get on with it. Is that right?
George Half right, and the wrong half is expensive. The Financial Conduct Authority says it doesn't plan to introduce extra regulations for AI. It'll rely on existing frameworks.
Emma So no rules.
George No new rules. The existing ones all apply. The Principles for Businesses, the Consumer Duty, the Senior Managers and Certification Regime, systems and controls, outsourcing. None mentions AI. All of them apply to it.
Emma Start with the Consumer Duty.
George It requires you to act to deliver good outcomes for retail customers. Four outcomes, and you can put each to a tool as a question. Products and services. Is it fit for the customers it's used with?
Emma Price and value?
George Does AI driven pricing leave some customers paying more for reasons you can't justify?
Emma Understanding.
George Can customers understand what an AI generated message or a chatbot is telling them? And do they know it's automated?
Emma And support.
George Can a customer reach a human being? And are they as well supported as they'd be without the tool?
Emma What about vulnerable customers?
George That's where automated journeys fail quietly. A chatbot doesn't hear distress. A scoring model treats a missed payment after a bereavement like any other.
Emma So what do I need?
George A way for the tool to recognise and hand over. A route that doesn't depend on the customer using the tool at all. And monitoring of whether outcomes are worse for vulnerable groups.
Emma If the supplier's tool gets it wrong, isn't that on them?
George No. Under the Senior Managers and Certification Regime a named senior manager is responsible for each area and must take reasonable steps to prevent breaches. That doesn't move when you buy a tool. Outsourcing a function doesn't outsource the responsibility.
Emma Is anything about to change?
George Probably. In January 2026 the Treasury Committee recommended the FCA give comprehensive and practical guidance on AI by the end of 2026. And on 6 July 2026 the FCA published the Mills Review, with seven recommendations.
Emma What's the headline?
George The first recommendation. Review general purpose AI tools that sit outside the regulatory perimeter but give outputs that look like financial advice.
Emma Does that change what I have to do today?
George No. They're recommendations. The Consumer Duty and the accountability regime are the law now.
The written material
The FCA's position
The Financial Conduct Authority describes its approach as principles based and focused on outcomes. It says it does not plan to introduce extra regulations for AI and will instead rely on existing frameworks. It points to the Consumer Duty and to the accountability of senior managers, and it runs an AI Lab to help firms develop uses safely.
The rules that already apply are wide. The Principles for Businesses, the Consumer Duty, the Senior Managers and Certification Regime, the rules on systems and controls and on outsourcing, and the conduct rules for the product concerned. None of them mentions AI. All of them apply to it.
The Consumer Duty, outcome by outcome
The Duty requires a firm to act to deliver good outcomes for retail customers. It has four outcomes, and each can be put to an AI tool as a question.
Products and services: is the tool, or the product it helps design, fit for the customers it is used with? Price and value: does AI driven pricing leave some customers paying more for reasons that cannot be justified? Consumer understanding: can customers understand what an AI generated message or a chatbot is telling them, and do they know it is automated? Consumer support: can a customer reach a human being, and are they as well supported as they would be without the tool?
| Outcome | The question to ask of an AI tool |
|---|---|
| Products and services | Is it fit for the customers it is used with? |
| Price and value | Does it charge some customers more without justification? |
| Consumer understanding | Can customers understand it, and do they know it is automated? |
| Consumer support | Can a customer reach a person when they need one? |
Customers in vulnerable circumstances
The Duty asks firms to pay particular attention to customers with characteristics of vulnerability: poor health, a life event such as bereavement, low resilience to financial shocks, or low capability with money or with digital services.
An automated journey can miss every sign a person would notice. A chatbot does not hear distress. A scoring model treats a missed payment after a bereavement like any other. So a firm needs a way for the tool to recognise and hand over, a route that does not depend on the customer using the tool at all, and monitoring of whether outcomes are worse for vulnerable groups.
Accountability, and what is coming
Under the Senior Managers and Certification Regime, a named senior manager is responsible for each area of a firm's business and must take reasonable steps to prevent breaches in it. That does not move when a tool is bought. A firm that outsources a function remains responsible for it, and a senior manager who cannot explain how a tool in their area reaches its outputs is exposed.
In January 2026 the Treasury Committee recommended that the FCA give comprehensive and practical guidance on applying consumer protection and individual accountability rules to AI by the end of 2026. On 6 July 2026 the FCA published the Mills Review, a report on AI in retail financial services to 2030 with seven recommendations. The first is to review general purpose AI tools that sit outside the regulatory perimeter but give outputs that look like financial advice. These are recommendations. Watch for what the FCA does with them.
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