The UK’s top financial regulator just admitted what everyone in the industry already knew: the rulebook can’t keep up with AI. FCA CEO Nikhil Rathi used a techUK conference appearance on June 24 to lay out the scale of the problem, noting that over 80% of financial services firms are now deploying AI in some form. His message to the industry was blunt. Regulators need to act as “stewards” in a market that’s evolving faster than the frameworks designed to govern it.
The regulatory gap widens
The FCA has been adamant about one position: it does not want to create AI-specific regulations. Instead, it’s betting on its existing principles-based approach, leaning on frameworks like Consumer Duty and the Senior Managers and Certification Regime (SM&CR) to handle AI-related risks. Rather than writing new rules for every AI use case, the FCA wants firms to apply existing obligations around consumer protection and accountability to their AI deployments.
A report from the UK parliamentary Treasury Committee on January 20 took direct aim at the FCA and fellow regulators for what it called a “wait-and-see” approach. The committee recommended that updated consumer protection guidance specifically addressing AI be published before the end of 2026.
