FCA selects eight firms for second wave of AI testing in financial services
The Financial Conduct Authority has chosen eight firms to live test AI applications in regulated financial services, expanding its AI Live Testing program to include Barclays, Experian, Lloyds Banking Group, and UBS.
The second cohort, announced at UK FinTech Week, will test AI systems across customer-facing and business-to-business operations through the end of 2026. Testing began in April following applications that opened in January.
The firms are exploring AI use cases including agentic payments, anti-money laundering detection, credit score insights, investment support, and Know Your Customer processes. The applications reflect the current state of AI development, with models ranging from small language models to neurosymbolic AI.
How the program works
The FCA is partnering with Advai, a London-based firm specializing in AI assurance, to provide technical support. The program helps firms address risk management and live monitoring questions as they deploy AI responsibly.
Jessica Rusu, chief data, information and intelligence officer at the FCA, said the initiative reflects "our commitment to supporting the pace of change in AI, whilst demonstrating how regulators and industry can work together to harness innovation responsibly."
The FCA will publish an evaluation report in Q1 2027 and a good and poor practice report for AI in financial services later in 2026.
Broader fintech activity
The announcement coincides with the FCA's Innovation Insights report, which shows applications to the Regulatory Sandbox and Innovation Pathways increased 49% year-on-year. Fintech market activity closely matches demand for the FCA's innovation services, particularly in AI.
The first cohort included NatWest, Monzo, Santander, and Scottish Widows. The full second cohort comprises Aereve, Coadjute, Barclays, Experian, Go-Cardless, Lloyds Banking Group (Scottish Widows), UBS, and Palindrome.
The FCA has committed to avoiding additional regulations for AI by relying on existing frameworks. In January, the regulator launched a review into the implications of advanced AI on consumers, retail financial markets, and regulators themselves.
Finance professionals managing AI adoption should understand how AI for Finance applies to regulatory requirements, or consider the AI Learning Path for CFOs for broader organizational context.
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