{"id":166042,"date":"2025-12-03T14:33:07","date_gmt":"2025-12-03T14:33:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/166042\/"},"modified":"2025-12-03T14:33:07","modified_gmt":"2025-12-03T14:33:07","slug":"ai-era-requires-totally-different-approach-to-regulation-says-fca-boss","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/166042\/","title":{"rendered":"AI era requires \u2018totally different\u2019 approach to regulation, says FCA boss"},"content":{"rendered":"

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The UK\u2019s top financial watchdog has taken a completely different approach to overseeing companies\u2019 use of technology such as artificial intelligence, committing not to \u201ccome after you every time something goes wrong\u201d.<\/p>\n

Nikhil Rathi, chief executive of the Financial Conduct Authority, said: \u201cWe have to think totally differently, not just about risk in the system but the way we regulate and how our organisations interact together.\u201d<\/p>\n

Speaking at the FT Global Banking Summit<\/a> on Tuesday, Rathi said the FCA had decided against making new rules for AI in financial services because \u201cthe frontier of that technology is moving every three to six months\u201d, meaning its usual approaches \u201cjust don\u2019t work in that kind of environment\u201d.<\/p>\n

\u201cThere needs to be a different relationship between regulator and regulated,\u201d Rathi said. \u201cWe are not going to come after you for everything that goes wrong \u2014 what we will be concerned about is egregious failures that are not dealt with.\u201d<\/p>\n

The FCA boss pointed to the EU\u2019s recent announcement<\/a> that it was pausing parts of its landmark AI legislation as a warning sign for other jurisdictions.<\/p>\n

\u201cI\u2019m not sure what detailed rules around AI would look like,\u201d he said. \u201cI think we have to be quite careful. If you look at where that has been done elsewhere, say, for example, in the EU they put the AI Act in place but then a couple of years later, just as it was becoming effective, they had to pause elements of it because the world had just moved on.\u201d\u00a0<\/p>\n

The FCA<\/a> and other UK financial regulators are under heavy pressure from ministers and City of London executives to ease the burden of rules to improve the country\u2019s competitiveness and revive its flagging economic growth.<\/p>\n

Rathi said weak UK productivity growth, rapid technological advances, rising defence and security threats and a global shift by regulators to modernise their rules had prompted the FCA to take a fundamentally different approach. <\/p>\n

\u201cThe environment has changed; therefore, we need to change,\u201d he said. \u201cIf we do not become rapid adopters of new technology, how are we going to go after that productivity challenge that we have? Go and innovate \u2014 we want you to use that technology.\u201d<\/p>\n

Financial services companies were using AI to transform many areas of their operations, including fraud detection, customer service, algorithmic trading and corporate research, Rathi said.\u00a0<\/p>\n

\u201cAll of that is good stuff, which we want to encourage and don\u2019t really want to get in the way of by putting new rules in place,\u201d the FCA boss said, adding that the regulator accepted \u201cthere will be bumps in the road\u201d with innovation.<\/p>\n

Rathi said the risks of new technology were \u201cquite sobering\u201d, particularly given the \u201cdoomsday scenarios\u201d for the financial system he had been told about that stem from the potential consequences of advances in quantum computing.<\/p>\n

However, he said the consumer duty rules introduced by the FCA a couple of years ago \u2014 requiring companies to ensure their customers have a good outcome without specifying exactly what that was \u2014 meant it did not have to write new rules governing how companies use AI.<\/p>\n

Separately, the FCA said on Wednesday that the first group of companies \u2014 including NatWest, Monzo, Santander and Scottish Widows \u2014 had joined its AI live testing initiative, which provided them with \u201ctailored support\u201d on how to use the technology \u201csafely and responsibly\u201d.\u00a0<\/p>\n

Preetham Peddanagari, UK financial services technology consulting leader at EY, said the FCA initiative was \u201cvery welcome\u201d, adding that a recent EY survey had found a quarter of companies using AI \u201cstill lack basic controls to protect customers and ensure compliance\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"Stay informed with free updates Simply sign up to the UK financial regulation myFT Digest — delivered directly…\n","protected":false},"author":2,"featured_media":166043,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[345,343,344,85,46,125],"class_list":{"0":"post-166042","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-il","12":"tag-israel","13":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/166042","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=166042"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/166042\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/166043"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=166042"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=166042"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=166042"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}