Car dealers may need to use an extra layer of compliance when using AI agents for motor finance under proposed rules, according to iVendi.
The motor finance technology company has highlighted recommendations to the Financial Conduct Authority (FCA) from the Mills Review, published this week.
The review aims to advise the FCA on how it should respond to the rollout of AI in retail financial services.
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James Tew, CEO at iVendi, said: “The FCA review could have significant implications for anyone involved in retail motor finance who is using, or plans to adopt, agentic AI.
“Our interpretation is that a second level of AI, ideally using completely separate technology, will be required for oversight of AI agents which are being used for any regulated activity.
“If this oversight AI flags up an issue in real time, there would be a kill switch which ends the conversation immediately and passes the consumer to a human expert. It would also independently score every interaction and alert a senior manager where issues appear to have arisen.”
AI records will need to be saved
Tew explained that all activity by AI agents would need to be recorded, along the lines of how call centres might be monitored using older technology.
He said: “In exactly the same way as you might record every human call that takes place around regulated activity, you will ensure there are recordings and transcripts of everything the AI agent does.
“It’s evidencing that may be needed in the event of any complaint because ultimately, as now, overall responsibility lies with senior management”
The review’s recommendations include the FCA building and adopting its own agentic supervisory model.
Tew said: “This would see the FCA deploy AI-to-agent workflows to continuously monitor individual lenders and dealers in near real time – checking compliance data and testing evidence against expectations to detect systemic risks and consumer harm far faster than is possible with traditional, document-based reporting.”
Question over rule interpretations
Tew argued that the main weakness of an AI oversight system would be that different lenders and sometimes dealers had different interpretations of the FCA’s Consumer Credit (CONC) Sourcebook, which contains rules and requirements for companies engaged in consumer credit activities in the UK.
He said: “AI agents base their dialogue on information from APIs provided by lenders and other parties, but their readings of the CONC Sourcebook do vary, and where there is room for interpretation, there is more likely to be hallucinations. This is an area that will need careful monitoring and management.
“Despite this, we think the Mills recommendations are welcome. There needs to be guidance on how agentic AI is used within motor finance and other areas of credit, and its general thinking is sound.”
Tew added that iVendi was already working with a variety of lenders and dealers to use its APIs as the basis for AI agents.
“We’re able to provide data covering a wide range of areas, including finance quotes, eligibility checks and more, and can do so for a wide range of lenders, placing us in an almost unique position. It is an expanding area of our business.”