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Nikhil Rathi said it plainly. The Financial Conduct Authority needs to rethink how it regulates financial services — because AI is moving faster than the rulebook can keep up.
Rathi, the FCA’s chief executive, made the remarks at techUK’s Agents of Change event in 2026. His message wasn’t subtle: over 80% of financial services firms have already adopted AI, and the industry has basically moved past the “should we do this” phase. The question now is how to scale it — and whether regulators can stay close enough to the action to matter.
Not a small problem.
What Rathi Actually Said
When Rathi joined the FCA, he pushed technology and data regulation to sit alongside traditional financial oversight — not as an afterthought, but as a core function. That instinct looks pretty well-timed now. Financial services firms aren’t just experimenting with AI tools. They’re embedding them into the infrastructure of how markets run. Rathi’s view is that the sector itself — its investment capacity, its trust frameworks, its operational backbone — is what gives AI adoption across the broader UK economy somewhere solid to stand.
That’s a bigger claim than it sounds. He’s not just talking about chatbots or fraud detection algorithms. He’s saying financial services are foundational to the UK becoming a serious AI economy. And if the regulatory environment gets it wrong, it doesn’t just hurt banks. It probably slows down the whole thing.
The speed is the hard part.
Regulations Built on Old Assumptions
Rathi was direct about where the friction is. The assumptions baked into current market regulations — about how quickly things move, about where risks concentrate, about what competition looks like — are being stress-tested by AI in ways nobody fully anticipated. Markets are moving faster than the frameworks designed to govern them. That’s not a theoretical concern. It’s the operational reality firms and regulators are both dealing with right now.
And it’s not just speed. It’s the nature of the change. AI doesn’t just accelerate existing processes. It reshapes them. The way prices get set, the way risk gets assessed, the way customers interact with products — all of it is shifting. Rathi seems to believe that regulators who treat AI as a layer on top of the old system will miss what’s actually happening. The underlying structure is changing.
So the FCA is doing something regulators don’t love to admit: it’s reconsidering the foundations.
Maintaining trust is the core of it. That’s the word Rathi kept coming back to — trust. Trust in the financial system, trust in market integrity, trust that competition is real and not gamed by whoever has the best model. AI can erode all three if the oversight isn’t sharp. But heavy-handed regulation can kill the innovation that makes the whole exercise worthwhile. That’s the bind.
No Clear Path Yet — And Rathi Knows It
The FCA isn’t rolling out a finished framework. That’s worth being honest about. Rathi’s remarks at the techUK event were more diagnostic than prescriptive. The regulator is engaging with industry stakeholders, running dialogues, trying to figure out what guidelines actually make sense when the technology keeps shifting under everyone’s feet.
It’s unclear yet what that engagement produces in concrete regulatory terms. No specific rules were announced. No hard deadlines. What came through clearly is that the FCA sees its role as active — not waiting for AI to fully mature before deciding how to govern it, but trying to shape the environment in real time.
That’s genuinely hard to do. Industry moves on commercial timelines. Regulators move on political and procedural ones. Rathi’s challenge is closing that gap without either suffocating firms that are trying to build something real or letting the market run so far ahead that consumer protection becomes a fiction.
He also put financial services at the center of something larger. The sector’s investment, its infrastructure, its credibility — these aren’t just internal goods. They’re what the UK’s AI ambitions depend on. If financial services firms can’t scale AI responsibly, and if the FCA can’t create conditions where responsible scaling is actually possible, the broader national strategy takes a hit.
Rathi didn’t pretend the answers are close. But he’s clearly decided that sitting on the sidelines while 80% of the industry runs experiments isn’t an option either.
The FCA is engaging with stakeholders on exactly how regulatory frameworks should adapt to AI-driven market changes.
Frequently Asked Questions
What share of financial services firms have adopted AI, per the FCA?
Per Nikhil Rathi’s remarks at the techUK Agents of Change event, more than 80% of financial services firms have already adopted AI.
What is the FCA’s current position on AI regulation?
The FCA is actively reviewing its regulatory frameworks to keep pace with AI adoption, focusing on preserving trust, competition, and market resilience while supporting innovation.
