- The UK’s Treasury Committee warns AI use in finance is outpacing regulatory oversight.
- Regulators are relying on existing rules rather than issuing new, specific guidance.
- The committee asks the Financial Conduct Authority to publish guidance by end of 2026 on consumer protection and senior executive responsibility.
- AI is already embedded in core banking, insurance, and payment systems, increasing opacity and accountability risks.
- Observers say unclear rules could both expose consumers to harm and deter careful firms from deploying AI.
A UK parliamentary body this month warned that rapid AI adoption across the country’s financial sector is moving faster than regulators can manage, raising questions about oversight, accountability, and dependence on major technology providers. The Treasury Committee set out its concerns in published findings and said regulators are relying too heavily on existing rules as banks, insurers, and payment firms expand AI use.
The committee said AI is already embedded in core financial functions while oversight has not kept pace with the scale or opacity of those systems. “By taking a wait-and-see approach to AI in financial services, the three authorities are exposing consumers and the financial system to potentially serious harm,” the committee wrote.
The report noted the UK government is pushing broader AI adoption and recalled Prime Minister Keir Starmer’s pledge roughly a year ago to “turbocharge” Britain’s future through the technology. At the same time, the committee said regulators have not given firms clear expectations for how current rules apply to AI-driven decisions. “AI and wider technological developments could bring considerable benefits to consumers,” it added.
The committee urged the Financial Conduct Authority to publish comprehensive guidance by the end of 2026 on how consumer protection rules apply to AI and on assigning responsibility to senior executives under existing accountability rules. Formal minutes of the session are expected to be released later this week.
Industry observers warned that earlier fintech regulation worked because regulators could see firm activity and intervene. Dermot McGrath, co‑founder of ZenGen Labs, said the model “worked because regulators could see what firms were doing and step in when needed,” but that AI “breaks that model completely.” He added unclear rules risk leaving managers to explain decisions they may not fully understand and could “regulatory ambiguity stifle the firms doing it carefully.”
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