Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.

FCA Urges Creation of Free AI-Powered Financial Guidance Service

The Financial Conduct Authority (FCA) has called for the development of a free, AI-powered money service to boost financial capability and protect consumers. The recommendation comes from a report by Mills, which highlights both the potential benefits and significant risks of AI in financial services.

The report states that AI could help address issues such as the low percentage of consumers receiving financial advice, limited uptake of life or income protection policies, low levels of product-switching, and lack of access to banking for 900,000 people in the UK. It also notes that £300bn is currently held in low-interest accounts, and AI could help tackle savings inertia.

However, the report warns that AI also increases the risk of fraud, with new threats such as deepfakes, synthetic identities, and personalised social engineering making attacks more difficult to detect and prevent. It also raises concerns about consumer and data protection, including the potential for AI to amplify bias, enable opaque pricing, exploit vulnerabilities, and deepen exclusion if access to high-quality tools is unequal.

Mills recommends that regulators take a more proactive approach to financial capability and access to AI-enabled services. The report suggests the FCA should consider working with government, The Money and Pension Service (MaPS), consumer bodies, and industry to explore the feasibility of a public-interest, AI-enabled financial capability service that is free at the point of use.

The report also highlights the risk that consumers may turn to mainstream AI services not subject to financial regulation, such as ChatGPT, Claude, and Gemini, for financial advice, leaving them without recourse.

These developments are relevant to UK letting agents and inventory clerks, as improved financial capability and access to regulated advice could impact tenants' and landlords' financial decisions, including those related to renting, deposits, and property management.