FCA shifts AI oversight toward continuous supervision

The UK’s Financial Conduct Authority is rethinking financial regulation for an AI-driven market, with chief executive Nikhil Rathi saying financial services will be central to the UK’s ambition to become a world-leading AI economy. More than 80% of financial services firms are already using or adopting AI, shifting the policy challenge from early uptake to safe deployment at scale.

Rathi identified agentic AI and tokenisation as major forces reshaping markets. Agentic systems could coordinate workflows, execute transactions, support bill management and investment strategies, and improve wholesale functions such as liquidity management and trading workflows. Tokenisation could reduce costs and risk through more programmable infrastructure, with banks piloting tokenized deposits and the FCA approving Baillie Gifford and Bank of New York Mellon to launch the UK’s first natively tokenised authorised fund.

The FCA is moving beyond traditional rule-making toward continuous supervision, stewardship and resilience. It is exploring agentic AI as a ‘first responder’ for wholesale market monitoring and expects to use system-wide powers more often to protect competition, consumers and market integrity.

Operational resilience is a growing concern as firms depend on cloud providers, model providers and data providers. UK Finance’s Annual Fraud Report suggests the UK lost almost £1.3 billion through payment fraud last year, with two-thirds of authorised fraud cases linked to social media sites and messaging platforms. The FCA is supporting AI adoption through its Supercharged Sandbox, AI Lab and AI Consortium with the Bank of England.