Treasury Committee report explores AI in Financial Services

The report warned that while AI adoption is accelerating across UK finance, regulatory clarity and risk management are not keeping pace.  

Key points include: 

➡️ Widespread AI use: Around 75% of UK financial services firms now use AI, particularly in banking and insurance, placing the sector ahead of most others;  

➡️ Rising consumer risks: The report flags increased risks of fraud, unclear AI-driven decision-making, and potential financial exclusion linked to automated systems; 

➡️ Regulatory ambiguity: The UK has no AI-specific financial regulation with supervisors relying on existing frameworks, which firms say leaves uncertainty over how rules are applied to AI use; 

➡️ Accountability concerns: Firms struggle to understand responsibility for harm caused by AI under the Senior Managers and Certification Regime (SMCR), creating hesitation around advanced AI deployment; and 

➡️ Operational resilience risks: Heavy reliance on a small number of AI and cloud providers raises systemic and cyber-resilience concerns for the financial system.  

✅ Firms using or deploying AI should review governance, accountability, and consumer risk controls closely, and stay alert to forthcoming supervisory guidance and potential stress testing expectations. 

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