The FCA's call for expanded regulatory powers to oversee AI in financial advice is not bureaucratic fearmongering. It is a belated recognition that the financial services rulebook has a critical gap. Britons are increasingly asking ChatGPT, Gemini and proprietary chatbots for investment decisions, mortgage advice and insurance guidance—and those systems operate outside the FCA's direct remit. This matters because the Consumer Duty (PS22/9) requires firms to act in the interests of consumers, but that obligation becomes meaningless if a consumer is taking advice from an AI system that no regulator has examined. The FCA's recommendation to expand its regulatory perimeter and build a public-interest AI financial guidance service is the right answer to a real problem.

This story is a symptom of a wider failure in how UK regulated firms have deployed AI. Many have adopted large language models or generic chatbots without meaningful governance, audit trails or understanding of what those systems actually output. They treat AI as a cost-saving tool rather than a regulated service. Insurance firms deploy claims-handling chatbots without stress-testing them against edge cases. Law firms and accountancies use AI for client advice without documented model cards or bias audits. Financial advisers integrate AI research tools without knowing whether the underlying training data is fit for regulatory use. The result is a market where the most sophisticated AI operators (firms using purpose-built, auditable systems) coexist with firms running what amounts to unsupervised autonomous decision-making.

Trovix's view is clear: the FCA is right to tighten this up, and firms should treat this not as a compliance burden but as a competitive advantage. The difference between a financial firm using generic AI and one using auditable, domain-specific AI is the same as the difference between a pharmacy using ChatGPT for dispensing decisions and one using validated pharmaceutical software. Systems like Trovix Reach are built for regulated advice, which means they include audit logs, decision transparency, model governance and clear accountability—the things the FCA will soon mandate anyway. Compare this to Microsoft Copilot or Claude, which are powerful tools but were never designed for financial regulation. Firms that wait for the FCA rules to be finalised before overhauling their AI stack will be months behind those that prepare now.

For a mid-market financial advisory firm, insurer, law firm or accountancy practice, the action is immediate and concrete. Audit what AI systems you already use—document what they do, how they were trained, what data they draw on and who is responsible if something goes wrong. Map that against the emerging FCA framework. Then decide: are you building a compliant AI layer now, or are you going to rebuild under regulatory pressure in 2027? If your current AI setup cannot produce a clear audit trail of how it reached a given decision, it is already a regulatory risk under the Consumer Duty. Trovix Audit exists precisely to give firms that visibility—to turn opaque AI into documented, defensible decision-making. The FCA's announcement is a signal. The firms that act on it first will set the standard.

Source: City AM