UK Treasury Committee urges financial regulator to issue AI guidelines

The UK Parliament’s Treasury Committee published a report on 20 January 2026. It calls on the Financial Conduct Authority (FCA) to issue comprehensive guidance by the end of 2026 on how consumer‑protection and individual‑accountability rules apply to artificial intelligence (AI) in financial services. The committee warns the current approach risks serious harm to consumers and to the wider financial system. (Treasury Committee report; The Guardian; Reuters).

MPs want regulators to require AI stress tests to probe model failures, bias, and systemic effects. They recommend firms map AI deployments, strengthen model governance, and retain clear human accountability for automated decisions. Reuters and The Guardian reported the stress‑test call. Computer Weekly reported the government has begun appointing banking technology leaders as AI champions.

What’s next: The FCA is the named lead. The committee expects guidance by year‑end 2026 on consumer protections, model validation, documentation, and incident reporting. Firms should inventory AI systems, assemble governance and validation evidence, and engage with regulators now to avoid sudden compliance gaps.

Why It Matters

• Regulatory timeline: The committee expects the FCA to publish guidance by end‑2026 — begin compliance planning now to align resources and timelines.
• Operational risk: Guidance will likely require model inventories, validation, documentation, and incident reporting — map critical AI flows and failure modes today.
• Testing expectations: MPs asked for AI stress tests covering failure, bias, and systemic impacts — prepare scenario sets, baselines, and monitoring to demonstrate resilience.
• Engagement: Early dialogue with the FCA and industry peers can shape guidance scope and reduce the risk of retroactive remediation or enforcement.