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FCA publishes an AI update and outlines its approach to AI

Sep 11, 2025 | FCA

Link(s):AI and the FCA: our approach | FCA
AI Update
FS25/5: AI Live Testing | FCA
F25/5: Summary of feedback received on the Engagement Paper proposing AI Live Testing
Engagement Paper 2025: Proposal for AI live testing

Context

The FCA has published a web page and an AI Update document outlining how it wants to support the safe and responsible adoption of AI in UK financial markets.  It has also published a Feedback Statement in response to the feedback it received to its April 2025 ‘Proposals for AI live testing’ Engagement Paper.

Key points to note and next actions

The FCA is supporting firms to experiment, develop, and test AI in a way that drives innovation, benefits consumers and markets (while balancing the risks) and supports the growth and competitiveness of UK financial services.

  • The FCA does not plan to introduce extra regulations for AI. Instead, it will rely on existing frameworks (e.g., Consumer Duty and the accountability and governance brought about by the SM&CR), which mitigate many of the risks associated with AI.
  • In its AI Update, the FCA sets out the FCA’s role and objectives, what it has done so far, its existing approach and what it plans to do in the next twelve months.
  • To date, the FCA has, jointly with the Bank of England, published the AI Discussion Paper (AI DP) (2022), the Feedback Statement (2023), the AI Public-Private Forum (AIPPF) Final Report (2022), and the 2019 & 2022 machine learning surveys.  These are in addition to the April 2025 Engagement Paper and the new Feedback Statement.
  • The FCA’s existing approach is to promote the safe and responsible use of AI in UK financial markets and leverage AI in a way that drives beneficial innovation.  The AI Update comments on safety, security, robustness, fairness, appropriate transparency, explainability, accountability, governance, contestability and redress.
  • Going forward the FCA wants to further its understanding of AI deployment in UK financial markets, build on existing foundations, collaborate further, introduce testing for beneficial AI (see below), and consider its own use of AI.
  • A more immediate proposal is the introduction of AI live testing, with firms being able to register or apply to be in the first cohort of firms by 15th September.
  • The FCA’s goal is to give firms the confidence to deploy AI systems in a way that drives growth and delivers positive outcomes for UK consumers and markets.
  • In its Supervision Hub, the FCA is using predictive AI to assist its agents with real-time knowledge, and an AI voice bot to point consumers to the correct organisation when they first contact us. (This might be to FOS, the FSCS, or to FCA staff).
  • The FCA is also experimenting with large language models (LLMs) to make its processes more efficient for authorisations and supervision.