The regulatory response to AI in financial services has been accelerating in recent months, with regulators and international standard-setters grappling with what AI—from traditional machine learning to generative and agentic systems—means for market integrity, consumer protection, financial stability, and operational resilience.
In the UK, the FCA has recently published the Mills Review which identifies AI as a systemic driver of change to 2030, describing four “system shifts” reshaping financial services, and setting out seven priority recommendations that include securing and adapting the regulatory perimeter. The DRCF has also published a Call for Input on consumer interest and AI, seeking views on consumer attitudes to AI risk and the tools available to manage it.
Internationally, governance and lifecycle management are central themes. For example, the FSB issued a consultation report setting out 12 sound practices for responsible AI adoption, covering governance, lifecycle management, and cyber, ICT, and third-party risk whilst IOSCO has published its final report on a Supervisory Toolkit for AI Use in Capital Markets, offering non-binding tools spanning governance, risk management, disclosure, recordkeeping, and monitoring.
Finally, liability and financial stability concerns are also coming into focus. A recent blog from our Australian colleagues, “Silent AI risks finally make some noise,” examines “silent AI” exposure—AI-related risks neither explicitly covered nor excluded under existing professional indemnity, public liability, cyber, and D&O insurance policies—creating coverage gaps and unmodelled concentration risk around foundation model providers. Both APRA and ASIC have also issued open letters highlighting weak AI governance, unclear accountability, and heightened cyber risks posed by frontier AI.
Podcasts and Vodcasts
For those wishing to explore some of these themes further, we have published a vodcast and a podcast mini-series examining AI and financial services regulation from multiple angles.