Bite-size: Financial services AI adoption plan published

New plan sets out the next steps for safe AI use across financial services

HM Treasury's Financial Services AI Champions have published a new adoption plan designed to help firms make greater use of artificial intelligence across the financial services sector. The report sets out ten recommendations for government, regulators and industry that could shape how AI is used in the years ahead. The focus is on giving firms greater certainty, improving resilience, developing skills and helping the UK become a leading centre for AI-enabled financial services. For regulated firms, the report provides a useful indication of where future policy discussions are likely to focus and where firms may need to start preparing.

‍Artificial intelligence is already widely used across financial services. Firms are using it to detect fraud, support customer service, improve operational processes and strengthen risk management. The authors of the report believe the next stage is helping firms move beyond isolated projects and adopt AI more widely across their businesses.

A recurring theme throughout the report is that regulation itself is not viewed as the main barrier to adoption. The authors note that firms generally support the UK's principles-based and outcomes-focused regulatory approach. Many firms have welcomed initiatives such as the FCA's AI Lab and regulatory sandboxes. What firms are asking for is greater clarity on how existing requirements apply when AI is being used. Areas highlighted include Consumer Duty, model risk management, operational resilience, explainability, accountability and the Senior Managers and Certification Regime.

One recommendation is that regulators work more closely together to provide clearer and easier-to-access guidance. The report suggests creating a central source of information and support to help firms understand how regulatory expectations apply to common AI use cases. It also recommends greater access to regulatory expertise when firms are considering new AI applications.

The report also raises questions about the growing use of general-purpose AI tools to provide financial guidance and advice-like outputs. The authors note that consumers are increasingly turning to AI tools for help with savings, investments and financial planning. At the same time, regulated firms remain subject to strict requirements around advice, suitability and consumer protection. The report suggests the FCA should examine the consumer and market impact of AI-generated guidance and consider whether changes to the regulatory perimeter are required.

Another area receiving considerable attention is operational resilience. The report highlights the increasing reliance of financial institutions on a relatively small number of global AI and cloud providers. The authors believe that concentration risk, service outages and cyber threats need closer attention as AI adoption grows. Recommendations include accelerating the Critical Third Party regime, creating an industry-wide AI incident-sharing system and developing a voluntary assurance scheme for third-party AI providers.

Skills and governance feature heavily throughout the report. The authors point out that AI adoption is not simply a technology issue. Firms need people who understand how AI works, how it should be governed and how risks should be managed. The recommendations cover training, workforce development and attracting specialist AI talent into the UK. Importantly, the report notes that capability is needed across boards, senior management, risk functions, legal teams and operational teams, not just within technology departments.

‍The report also highlights the growing interest in agentic payments, where AI systems can initiate and manage transactions with limited human involvement. The authors see this as an area where the UK could establish a leading position, but acknowledge that important questions remain around liability, consent, accountability and fraud prevention. The report recommends the development of common standards covering legal responsibility, identity verification and governance before these services become widely adopted.

‍Many of the themes raised in the report will feel familiar to firms already working through Consumer Duty, operational resilience, third-party oversight and governance requirements. The report does not call for a completely new regulatory regime. Instead, it points towards greater clarity, better coordination between regulators and wider adoption of existing good practice. Firms that are already considering governance, accountability, oversight and risk management in relation to AI are likely to be better placed as policy discussions develop.

‍The Adoption Plan follows the FCA's Mills Review, published earlier in July, which looks further ahead at how AI could change retail financial services through to 2030 and beyond. The two publications cover many of the same areas including the regulatory perimeter, governance, consumer outcomes, resilience and the growth of agentic AI. The Mills Review also considers how AI may move from supporting decisions to recommending, initiating and carrying out actions on behalf of consumers. It makes seven recommendations to the FCA including work on the regulatory perimeter, closer oversight across the financial system, further development of the FCA's AI Lab and preparation for agentic finance.

‍For firms, the two reports add to the case for looking at AI use now through the rules and duties that already apply. The FCA has not proposed a separate set of AI rules and existing requirements including Consumer Duty, SM&CR and operational resilience remain highly relevant as firms introduce new tools and give AI a greater role in customer and business decisions.

How Auxillias can help

AI is already forming part of the legal, regulatory, risk and governance work Auxillias carries out with firms across motor, asset and consumer finance. We support boards, senior management teams, legal and compliance functions as they assess where AI can be used, the rules that apply and the controls and oversight needed as its use grows.

‍Our work can include reviewing current and proposed AI use cases, governance and accountability, Consumer Duty and customer outcomes, SM&CR responsibilities, third-party and outsourcing arrangements, operational resilience, data use, customer communications and financial promotions. We can also help firms assess where AI is recommending, making or carrying out decisions and what that means for human oversight, record keeping and accountability.

Training is an important part of this work. Auxillias provides AI briefings and training for boards, senior leaders, legal, compliance, risk and operational teams, with sessions tailored to the business and the way it plans to use AI.

‍If your firm is reviewing its use of AI, considering new applications or would like training for your board or wider team, please contact Auxillias to discuss how we can support you.

‍ ‍ Key takeaway

‍The Financial Services AI Adoption Plan provides a clear indication of where future policy work is likely to focus. Regulatory clarity, governance, accountability, resilience, third-party oversight and skills development all feature prominently. Firms considering wider use of AI should continue to assess how existing regulatory requirements apply and whether governance arrangements remain appropriate as AI use grows.

If you would like support in this area please get in touch with the Auxillias team via the details on this page.

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