Technology
By Dan Saada
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Governance Is the Real Battleground. The FCA's focus on governance isn't accidental. AI models don't fail dramatically — they drift.
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What Firms Should Expect Next. Later this year, the FCA plans to publish examples of good and poor practices it's seen during its…
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Britain's financial watchdog isn't writing new rulebooks for artificial intelligence. The Financial Conduct Authority is instead sitting down with firms, asking hard questions,…
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The FCA's position is pretty clear: existing frameworks — the Consumer Duty and the Senior Managers and Certification Regime, known as SM&CR — are enough for now.
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SM&CR already puts named individuals on the hook for firm-wide failures. And the Consumer Duty, which came into full effect in 2023, demands that firms deliver good outcomes…
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The FCA also wants firms to think hard about explainability — how AI-driven decisions get communicated to customers.
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Related: FCA Hits Carlos Ricardo Fuenmayor with £99,600 Fine Over Hidden Financial Interests
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And the timing matters. AI adoption across financial services has moved fast. Banks, insurers, and wealth managers are all running models that influence credit decisions, fraud…
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That said, the watchdog isn't just collecting information. It's building a picture of where the real risks sit.
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The FCA's ongoing dialogue also covers a specific concern: AI tools that interact directly with consumers.
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There's no indication the FCA is about to pivot to a hard regulatory stance. But it's also not staying quiet.
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Read also: Amplifi Capital Collapses Into Administration, Freezing New Loans for Reevo Money and My Community Finance
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Firms that get ahead of this — strong governance, clear explainability, documented testing, proper monitoring — are probably in decent shape.
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The authority plans to keep adapting its approach as technology and industry feedback evolve.
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The SM&CR accountability hook stays central to all of it.
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