FCA and ICO to Develop AI Guidelines for Financial Services Firms

FCA and ICO Set to Establish AI Guidelines for Financial Services

The Financial Conduct Authority (FCA) and the Information Commissioner’s Office (ICO) are collaborating to create new rules governing the use of artificial intelligence (AI) within financial services firms. Their goal is to support innovation while safeguarding privacy through a statutory code of practice focused on AI and automated decision-making.

FCA CEO Nikhil Rathi and UK Information Commissioner John Edwards emphasized that regulation should enable innovation rather than hinder it. They stated, “Done right, regulation isn’t a brake on innovation. It’s a bridge, connecting creativity with public trust.” With clear rules, firms gain the certainty needed to invest, test, and grow responsibly.

Industry Engagement and Practical Guidance

Last month, a roundtable with industry leaders helped identify challenges in deploying AI. While firms generally understand the broad regulatory framework, they seek clearer examples of best practices and more engagement opportunities to build confidence with new technologies.

To address these needs, the FCA and ICO will develop a statutory code of practice and support firms through the FCA’s AI Lab, where companies can develop, test, and evaluate AI solutions. A future roundtable with smaller firms will focus on adoption challenges. Additionally, the Digital Regulation Cooperation Forum is working to align regulatory approaches across different bodies and resolve any conflicts.

Clarifying Responsibility and Providing Support

One key concern for firms involves accountability when AI tools are developed by third parties. The ICO has published detailed guidance on how responsibility is allocated across the generative AI supply chain. Meanwhile, the FCA has provided information on firms' responsibilities when adopting generative AI.

Existing support includes the FCA’s Digital Sandbox, Supercharged Sandbox, and AI Live Testing within the Innovation Hub. The ICO offers similar resources through its Innovation Advice Service, Regulatory Sandbox, and Innovation Hub.

However, both regulators plan to increase the visibility of these services and clearly signpost practical help available to firms.

Encouraging Early and Open Dialogue

Rathi and Edwards urge firms and trade bodies to engage earlier in the innovation process, not just when problems arise. They believe ongoing dialogue is essential to improving regulatory frameworks and supporting responsible AI use.

“We can help firms do things differently. But we need their insight to do things better,” their statement concludes.

With clear guidance and regulatory confidence, businesses in the UK will be better positioned to invest in AI technologies that support economic growth and responsible innovation.

For those in finance looking to deepen their AI knowledge and skills, resources like Complete AI Training's AI tools for finance offer practical courses and tools to stay ahead in this evolving space.