Artificial Intelligence (AI) update

Financial Conduct Authority, Artificial Intelligence (AI) update, further to the Government's response to the AI White Paper

Guidance, not a law: the Financial Conduct Authority's reading of The Consumer Duty: Principle 12 and the cross-cutting rules and outcome rules for retail customers. It binds nobody by itself; the law it reads does.

Guidance on an AI sector rules rule, addressed to private bodies.

Criminal exposure: No
Enforcement body: Financial Conduct Authority
Instrument type: guidance published by a regulator
Obligation class: Governance
Audit expectation: periodic
Who audits it: Self

As of 10 October 2026.

What the regulator expects

It is addressed to a firm the Financial Conduct Authority regulates, and the FCA states that a firm that uses AI as part of its business operations remains responsible for ensuring compliance with the FCA's rules, including in relation to consumer protection (paragraph 3.45).
The FCA says a firm should consider its obligations under the Consumer Duty when it uses AI, because AI can raise risks for consumers, for example where AI in risk assessments leaves some customers worse off or excludes them from the market (paragraph 3.25).
The FCA says a firm using AI in a way that embeds or amplifies bias, leading to worse outcomes for some groups of consumers, might not be acting in good faith toward its customers unless differences in outcome can be justified objectively (paragraph 3.26).
The FCA says the operational resilience requirements in SYSC 15A would include a firm's use of AI where it supports an important business service (paragraph 3.14).
The FCA points to the outsourcing rules in SYSC 8, and SYSC 13 for insurers, which depend on the type of firm and the function outsourced, as relevant to safe and robust use of AI (paragraph 3.15).
The FCA says any use of AI in relation to an activity, business area or management function of a firm falls within the responsibilities of a Senior Management Function manager (paragraph 3.40).
The FCA says a firm's board review of whether the firm is delivering good outcomes under the Consumer Duty might include consideration of current or future use of AI where it might affect retail consumer outcomes (paragraph 3.43).

What this law does

Drafted with AI

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Research summary

Legal information, not legal advice. This is LexLint's own research summary of a public legal source, and it creates no attorney-client relationship. For decisions that matter, consult qualified counsel in the relevant jurisdiction. About LexLint

In April 2024 the Financial Conduct Authority published an AI Update outlining its approach to AI following the Government's publication of its pro-innovation strategy on AI. The Update says the FCA's rules, regulations and core principles do not usually mandate or prohibit specific technologies. It says many risks related to AI are not unique to AI and can be mitigated within existing legislative and regulatory frameworks.

The Update states that firms that use AI as part of their business operations remain responsible for ensuring compliance with the FCA's rules, including in relation to consumer protection. On the Consumer Duty it says that, if firms use AI in risk assessments, some customers will do better than others and some might be excluded from the market. It says the operational resilience requirements in SYSC 15A would include a firm's use of AI where it supports an important business service.

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