More than three-quarters of UK financial services firms are already using AI for core functions like claims processing and credit assessments. The regulators tasked with keeping those firms in check? Still workshopping their approach.
A Treasury Select Committee report released on January 20, 2026, delivers a pointed critique of how the Financial Conduct Authority, the Bank of England, and HM Treasury have handled the rise of artificial intelligence in finance. The verdict: the current strategy of watching and waiting risks serious consumer harm and potential systemic instability.
The gap between adoption and oversight
More than 75% of UK financial firms are already deploying AI across their operations, making lending decisions, processing insurance claims, and scoring creditworthiness.
To address this, the Committee recommends several concrete steps. It wants the FCA and Bank of England to implement AI-specific stress testing, essentially pressure-testing how financial institutions’ AI systems perform under adverse conditions. It also calls for the FCA to issue practical guidance on consumer protection and accountability by the end of 2026.
