Financial authorities in the UK question tech giants OpenAI, Microsoft, and Meta regarding the application of AI in financial services.
In a series of recent developments, the UK government and financial regulators are taking strides to strengthen the nation's position in the rapidly evolving world of artificial intelligence (AI).
Brent Hoberman, co-founder of lastminute.com, has voiced concerns about the UK potentially becoming "users, not makers" of AI due to US tech investment. In response, calls have been made for targeted support to ensure startups and scaleups benefit from large-scale tech deals, with a focus on national digital sovereignty.
The Financial Conduct Authority (FCA) has taken the initiative by launching an AI Lab in January 2025. The lab aims to deepen understanding of AI risks and opportunities for consumers and markets. Notably, the FCA has emphasised that it will not be introducing separate AI regulations at this stage, preferring to rely on existing frameworks.
The FCA's AI Lab is being expanded in partnership with Nvidia through the 'supercharged sandbox'. This innovative platform offers computational resources, tooling, and regulatory guidance to smaller firms and startups experimenting with AI.
Meanwhile, more than half of senior leaders in banks, insurers, and asset managers plan to increase AI investment in the next 12 months, according to Lloyds Bank's financial institutions sentiment survey. This surge in investment is mirrored by a growing optimism towards AI, with over 90 per cent now seeing AI as more opportunity than threat. Reported productivity gains from AI have also risen significantly, jumping to 59 per cent from 32 per cent the previous year.
However, concerns about the lack of regulatory compliance in AI systems persist. Research by EY reveals that almost a quarter of financial services firms lack measures to prevent unauthorised access or corruption in their AI systems, and 26 per cent of firms have minimal or no controls to ensure AI systems comply with regulation.
To address these concerns, the Treasury Committee has sent letters to six major technology firms, including OpenAI, Microsoft, Meta, Amazon, AWS, Google Cloud, and Anthropic, seeking detailed information about their role in providing AI services to the UK financial sector. The Committee has also invited firms to provide recommendations for future AI governance.
The UK Treasury has announced a landmark "Tech Prosperity Deal" aimed at cementing Britain's position as a global leader in AI, quantum, and nuclear energy. The agreement is underpinned by £31bn in private investment from America's largest tech firms.
The Treasury Committee, chaired by Dame Meg Hillier MP, is conducting an inquiry into AI in financial services, ahead of forthcoming sessions with regulators and HM Treasury. The Committee oversees HM Treasury and associated bodies, and its inquiries aim to hold ministers and industry accountable rather than act as government investigations.
Firms are asked to outline their AI strategies, preparations for system failures, interactions with the Bank of England and the Financial Conduct Authority (FCA), and views on proposed legislation such as the Artificial Intelligence (Regulation) Bill. The Treasury expects responses by 1 October, which will be made public.
AI could put around 27,000 banking jobs at risk, with up to 178 million work hours potentially cut over the next five years, according to research by Juniper and Zopa Bank. Despite these potential job losses, the overall economic impact of AI is expected to be positive, with productivity gains outweighing the losses.
In a proactive move, the Treasury has invited firms including Google DeepMind, OpenAI, Anthropic, and other leading AI companies to a workshop to advise on future governance issues in artificial intelligence. The Committee's inquiry and the workshops are part of the UK government's commitment to ensuring a responsible and beneficial integration of AI into the financial sector.
