Sheldon Mills recommended the FCA decide within 3–6 months whether to “secure and adapt” the regulatory perimeter for general-purpose LLMs currently outside financial regulation. Mills floated powers to require firms to explain AI decisions, audit algorithms for fairness, and fine systems causing consumer harm.
Concentration risk: firms leaning on a handful of cloud and AI providers could create system-wide risk. Mills is not calling for a UK AI Act but suggesting sector-by-sector regulation has a hole where foundation models sit. Intervention from a regulator that has mostly followed pro-innovation principles-based approach.