<\/p>\n
Agentic AI<\/a>\u00a0is a term describing systems set up to act autonomously based on dynamic reasoning, with little or no human input. Use of agentic AI tools has been growing in popularity in the world of online shopping and payments, but the way agentic AI systems operate grates with existing payments regulations, as David Tilbury<\/a> of Pinsent Masons highlighted earlier this month when exploring what new rules for agentic AI in payments might look like<\/a>.<\/p>\n That fact has now been acknowledged by the Treasury: it said existing payment services regulations \u201cmay not fully facilitate the use of agentic AI\u201d. It wants the UK to UK lead the world in agentic payments and has opened a consultation on modernising the regulations<\/a> (43-page \/ 453KB PDF), giving industry the chance to have its say on how the framework should be adapted.<\/p>\n David Heffron<\/a> of Pinsent Masons, an expert in financial services regulation, said: \u201cThe Treasury’s consultation marks a decisive shift in the regulation of payment services in the UK.\u201d<\/p>\n \u201cRather than simply updating existing rules, the government is proposing a more agile model in which detailed requirements increasingly sit in the FCA Handbook, while the statutory framework focuses on key principles, perimeter issues and consumer protections. Alongside this structural reform, the consultation seeks to future-proof regulation for stablecoin payments, tokenised deposits, agentic AI-powered payments and the next phase of open banking, signalling a clear ambition for the UK to become a global leader in payments innovation,\u201d he said.<\/p>\n On agentic AI specifically, the Treasury said there is a \u201cmajor opportunity for the UK to lead the development of agentic payments globally\u201d. It said the UK regulatory framework for payment services and electronic money \u201cmust be set up to facilitate and support these innovations whilst managing risks to consumers and businesses\u201d.<\/p>\n In its separate financial services AI adoption plan<\/a> published on Tuesday, the Treasury said establishing a \u2018trust framework\u2019 to support agentic payments protocol\u00a0is a \u201chigh\u201d priority. It said agentic payments are a \u201cnear-term, practical proxy for a broader class of emerging autonomous financial systems\u201d. As a result, it said getting the framework right for enabling agentic payments could pave the way for \u201cbroader, more complex agentic applications\u201d across UK financial services.<\/p>\n Work in developing this new framework, the Treasury said, should be focused in three areas: on defining clear legal constructs and dispute mechanisms to unambiguously assign accountability when autonomous agents transact; establishing standardised identity and verification frameworks specifically designed for AI and autonomous software agents; and creating interoperable technical standards that ensure safe, frictionless, and trusted machine-to-machine authentication. It said industry should lead on the development of these new standards, but that government is open to legislating where appropriate \u201cto provide clarity and enable safe adoption\u201d.<\/p>\n Malcolm Dowden<\/a> of Pinsent Masons, an expert in AI law, said: \u201cThe core issue in relation to payments made by agentic AI is determining when a payment effected by agentic AI exceeds authority given by the payer, whether through hallucination or through the goal-oriented behaviour of agentic AI. Focus will therefore be on the interaction between three provisions under the UK\u2019s Payment Services Regulations 2017 \u2013 rules which establish consent or authority; rules requiring the payer to act within the issuer’s terms and conditions; and rules that allocate liability for unauthorised payments.\u201d<\/p>\n \u201cA key problem with agentic AI is that it would first be necessary to work out whether the system has exceeded the authority conferred on it by the payer before being able to address allocation of liability,\u201d he said.<\/p>\n In his Mansion House speech<\/a> on Tuesday, Bank of England governor Andrew Bailey said that AI is likely to boost UK economic growth but warned that it also \u201ccreates problems of law\u201d. He cited agentic AI as an example and said there is a need to address the questions its use poses \u201cpro-actively and positively\u201d.<\/p>\n Bailey said: \u201cTypically, in law a principal becomes responsible for an agent while the agent operates within the remit given to it by the principal. If the agent goes beyond that remit, or acts improperly, it becomes responsible. Traditionally that had depended on the agent having a legal persona, i.e. being a human or a company etc. But when the agent has no legal persona does that leave the principal responsible at all times? If so, principals may need to constrain agents in ways that cut against the direction of innovation in AI models.\u201d<\/p>\n \u201cPut another way, is agentic AI in this context more a tool of the principal rather than strictly an agent, with the principal fully liable for all that is done and not done? Does this apply when real money is spent in ways that are final and binding, as and when agentic AI is allowed to hold the purse strings? This removes questions around the boundary of authority but should leave principals wondering how their governance frameworks can effectively operate with this technology. We must think about these things now: and I use this case study to illustrate why we must take a positive and pro-active approach to solving problems which are critical to ensuring effective innovation,\u201d he said.<\/p>\n