UK Financial Watchdog Plans to Automate Supervision With AI, Holds Off on New Chatbot Rules

The UK’s Financial Conduct Authority (FCA) plans to use artificial intelligence (AI) to automate more of its supervisory and enforcement activities, while holding off on introducing new AI-specific regulations for financial services.

The regulator aims to become an “agentic regulator”, using AI to improve intelligence gathering, analyse information and scale up regulatory interventions. Jessica Rusu, the FCA’s chief data, information and intelligence officer, said the authority was exploring ways to embed AI across authorisations, supervision and enforcement.

The move follows recommendations from the Mills Review, published in July 2026, which called for an AI-enabled supervisory model to address the growing use of autonomous AI systems in financial services.

However, FCA Chief Executive Nikhil Rathi has expressed reservations about introducing additional regulatory powers before fully utilising existing ones. He noted that AI models providing general information, without personalised recommendations leading to financial transactions, do not fall entirely within the current regulatory framework.

The FCA has also been testing AI adoption at financial services firms and plans to publish findings on good and poor practices.

The approach reflects the regulator’s preference for adapting existing rules while assessing emerging risks, particularly as consumers increasingly turn to chatbots for financial guidance.