United Kingdom: Treasury Committee published report on artificial intelligence in financial services

On 20 January 2026, the Treasury Committee published its final report concluding the inquiry into the opportunities and risks of artificial intelligence (AI) in the financial services sector. The inquiry, which was originally launched on 3 February 2025, examined the impact of automated technologies on consumer protection and financial stability across insurers, international banks, and digital payment providers. The report highlights that approximately 75% of UK financial services firms currently utilise AI, representing a higher rate of adoption than other national economic sectors. The findings indicate that while AI may facilitate faster services and enhanced cybersecurity defences, it introduces significant risks regarding non-transparent decision-making in credit and insurance, potential financial exclusion for disadvantaged consumers, unregulated AI financial advice, and increased levels of fraud. The investigation clarified that the United Kingdom currently lacks AI-specific financial legislation, leaving the Financial Conduct Authority (FCA) and the Bank of England to supervise firms using the existing Senior Managers and Certification Regime and Consumer Duty. The committee identified concerns from industry stakeholders regarding a lack of practical clarity in applying existing rules to AI models, specifically concerning the application of the Senior Managers and Certification Regime to situations involving AI. Consequently, the report recommends that the FCA publish comprehensive guidance on consumer protection and accountability by the end of 2026. The committee also recommends that the Bank of England and FCA conduct AI-specific stress testing to address market shocks. Finally, the report recommends that HM Treasury designate major AI and cloud providers as critical third parties as part of the UK Critical Third Parties Regime, which would bring those parties under special oversight.