Lawmakers are calling for a shift from a wait-and-see attitude as automated systems spread across finance, saying Britain’s financial regulator is not moving fast enough to limit AI-related risks to consumers and market stability.
The Treasury Committee said the Financial Conduct Authority and the Bank of England should launch AI-specific stress tests. The goal is to have basic readiness.
Automated systems are already impacting pricing, trading, insurance claims, and credit. The appearance of the shock scenario has changed.
The committee also called on the FCA to publish guidance by the end of 2026 clarifying how consumer protection rules apply to AI and the level of understanding senior managers must have about the systems they operate under their authority.
Committee chair Meg Hillier said this evidence does not give her confidence that the system is prepared for significant AI-related failures. Risk is not an abstraction. A single incident can quickly ripple across your organization and customers.
Agentic AI, which performs autonomous actions rather than generating content, adds pressure. The FCA told Reuters late last year that banks were rushing to introduce such tools, exposing retail customers to new failure modes. Around 75% of UK financial companies are already using AI across core functions such as claims processing and credit scoring.
After acknowledging efficiency gains, the report focused on risks. Unclear credit results. Algorithmic adjustments to eliminate vulnerable customers. Unregulated financial advice provided through chatbots. Once incorporated, these issues scale rapidly.
Witnesses also cited concerns about financial stability. Reliance on a select number of U.S. technology providers for AI and cloud services concentrates operational risk.
AI-driven trading systems could intensify herd behavior, amplifying rather than dampening market movements.
The FCA said it would review the report. The regulator has previously resisted AI-specific rules, arguing that technology is changing too quickly for bespoke regulations.
A Bank of England spokesperson said the central bank was assessing AI risks and taking steps to strengthen resilience and would consider the committee’s recommendations before responding.
Hillier told Reuters that increasingly capable generative AI is already impacting financial decision-making. System failures will hit consumers the hardest, she said.
Separately, the UK Treasury has appointed Starling Bank chief information officer Harriet Rees and Lloyds Banking Group executive Rohit Dhawan to advise on steering the implementation of AI across financial services.
