UK FCA and Bank of England Approach to AI in Finance

The FCA and Bank of England study how AI is being used in UK financial services, including governance, third-party dependence, automation, benefits and perceived risks. Their joint survey findings are evidence about participating firms and the sector at a point in time; they do not create a new rule. The FCA’s approach page says that it plans to rely on existing frameworks, which are principles-based and focused on outcomes, rather than introduce extra AI-specific regulation at present. That approach means firms cannot treat a model or vendor as a separate responsibility. Existing requirements still apply to the products and services firms offer, the way they communicate, their governance and senior accountability. For example, the FCA points to Consumer Duty expectations for products, fair value, communications and support, as well as accountability under the Senior Managers and Certification Regime. What those frameworks require depends on the firm, activity, customer and facts. The FCA also supports testing and practical learning through its AI Lab, AI Consortium, Live Testing service and Supercharged Sandbox. Those programs can help firms experiment or discuss a use case; participation does not amount to regulatory approval or remove legal obligations. Research can help regulators and firms understand emerging issues, such as cyber risk, data quality, explainability, third-party concentration and how AI affects consumers. Firms should evaluate both benefits and failure modes in the actual deployment. An AI system used to summarize documents internally raises different issues from one that recommends or makes consumer-facing decisions. Governance should identify an accountable owner, the data and model involved, the effect of outputs, human review, complaint routes and fallback procedures. If a consumer is harmed, “the model did it” is not a substitute for accountable remediation. Monitor current FCA and Bank of England publications because survey results, initiatives and supervisory priorities can change. The regulators’ support for innovation operates alongside their responsibility to protect consumers and market integrity.