The UK must maintain a principles-based approach to regulating artificial intelligence (AI) in retail finance – but with far greater operational clarity, according to a new submission from CFA Institute.
In response to the Financial Conduct Authority’s (FCA) review into the long-term impact of AI on retail financial services, the global investment body supported the regulator’s decision not to introduce a standalone ‘AI rulebook’.
Instead, it argued that existing frameworks, such as the Consumer Duty and the Senior Managers and Certification Regime (SM&CR), already provide a sufficient foundation when they are applied more explicitly.
One of the main challenges is the rapid evolution of AI systems from assistive tools to advisory engines, and in some cases autonomous decision-makers. This shift risks exposing gaps between regulatory intent and real-world consumer outcomes.
CFA Institute said oversight should focus on what AI systems do, rather than how they are labelled.
Many retail-facing tools already deliver “advice-like” outputs, including personalised nudges and portfolio guidance, without meeting the formal regulatory definition of advice.
The body proposed a tiered governance framework aligned to the spectrum of AI use, alongside clearer expectations around “meaningful oversight” under SM&CR and end-to-end accountability for consumer outcomes. It also called for closer coordination between the FCA and the Bank of England, as well as continued alignment with IOSCO (International Organisation of Securities Commissions) and the Financial Stability Board.
It argued that the UK’s competitiveness in AI-enabled finance will depend not only on regulation, but on maintaining access to hybrid talent capable of bridging new technologies with fiduciary responsibility.
