A new report from the Treasury Select Committee warns that the Bank of England, the FCA, and the Treasury are endangering the public and financial stability by maintaining a passive “wait-and-see” approach toward the rapid integration of AI. While acknowledging that the adoption of AI by over 75% of UK financial firms offers significant benefits for administrative efficiency and core services, the Committee argues that current regulatory oversight is insufficient to manage the accompanying risks. To mitigate potential harms, MPs recommend that the FCA issue practical guidance on consumer protection and executive accountability by the end of 2026, and that regulators implement AI-specific stress testing to prepare for future market shocks. Furthermore, the report criticises the Government’s failure to utilise the Critical Third Parties Regime, urging the immediate designation of essential AI and cloud providers to ensure proper investigation and enforcement powers are in place to bolster sectoral resilience.
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