The Financial Conduct Authority (FCA) has today released its long-awaited Mills Review, which sets out how artificial intelligence (AI) could reshape retail financial services – including the mortgage market.
In relation to mortgages, the findings suggest AI is already playing a role in the mortgage process.
FCA data shows that nearly one in five people who had engaged with mortgages or other property-related finance in the past 12 months reported using AI during part of the process.
Out of 5,026 consumers surveyed, 6% said they had shopped for or used a mortgage or property-related finance product in the last year.
Of those, 18% said they had used AI to assist them in some aspect of their search.
DIRECT CHANNELS MORE ATTRACTIVE
In its report, the FCA said: “AI challenges intermediation. If customers can use agentic AI to search and compare more of the market with lower effort, the information gap between firms, intermediaries and customers may narrow.”
It added: “As customers increasingly use AI assistants or agents to search and compare and select products, firms may need to present product information and regulated communications in ways that are legible to those systems as well as to humans, within the context of regulations on financial promotions.”
The regulator said where intermediation reflects distribution or onboarding costs: “AI could make it more attractive for product providers to serve customers through their own channels rather than relying on intermediaries.”
However, it stressed that “one key driver of intermediation is trust, and in particular having a specific human to speak to throughout a complex and high value process such as getting a mortgage.”
“ONE KEY DRIVER OF INTERMEDIATION IS TRUST”
The FCA research found customers are more willing to trust AI in lower-value financial services, or where the consequences of mistakes are lower.
It said: “Furthermore, even in a world of widespread use of AI in financial services, many customers will still prefer to deal with intermediaries,” including where they prefer human-led advice, established relationships, or where AI tools do not provide a whole-of-market comparison.
The report added: “AI delegation may not remove intermediation so much as relocate it: from brokers, comparison tools or product providers towards AI agents, platforms and data access layers that shape what consumers see and can act on.”
AI COULD RESHAPE COMPETITION
The FCA also warned that AI systems could increasingly sit between consumers and financial firms, acting as an “interface” that filters and ranks options.
It said this could shape competition in markets such as mortgages by influencing which lenders and products are visible, how they are ranked, and how trade-offs are presented to consumers.
The regulator added that while this may appear neutral to users, “the underlying interface could be shaped by commercial arrangements, technical integrations or paid placement,” creating a new layer of competition based on algorithmic visibility.
REGULATORY RISKS
One of the recommendations in the report is that the FCA should conduct a further review within three to six months, examining how consumers are already using AI tools in financial decision-making – including mortgages – and the implications for competition, innovation and consumer harm.
The report however, warned it may already be difficult to keep pace with change, stating that as AI becomes more embedded in consumer journeys, “functionally similar activity to what we recognise as regulated activity may become established outside the perimeter before oversight adapts.”
Karl Griffin, chief executive officer and co-founder of JammJar, said: “The Mills Review is the clearest signal yet that AI in financial services has moved from experiment to expectation and the most important question in the entire review is who will control the client relationship by 2030.
“The FCA lists four candidates: incumbents, Big Tech, AI intermediaries, or the consumer’s own AI agent.
“Advisers aren’t guaranteed a seat at that table”
“Advisers aren’t guaranteed a seat at that table. so the way to keep it is to become AI-native yourself. That the intelligence sits inside your firm rather than between you and your client.
He added: “This review should reassure advisers, not frighten them. The FCA has concluded that the existing framework, including Consumer Duty, is fit for purpose, and it frames AI as the answer to the advice gap rather than a replacement for advice.
“Human judgement stays at the centre. What changes is everything around it: the admin, the data, the follow-up. Firms that let AI carry that load will serve more clients, better, without hiring an army to do it.”