FCA Issues Guidance for Firms on Their Use of AI

The guidance provides examples of good and poor practices and is designed to help firms apply the existing regulatory framework to their use of AI.

By Becky Critchley, Stuart Davis, Nicola Higgs, Gabriel Lakeman, and Charlotte Collins

Key Points:

• The guidance focuses on three key areas: the Consumer Duty and vulnerable customers, governance and accountability, and operational resilience.
• An accompanying FCA speech confirms that the regulator is embedding the Mills Review’s recommendations into live work and that the FCA is itself becoming an “agentic regulator”.
• Supervisory scrutiny of firms’ AI use is set to increase, so firms should map their AI use cases against the good and poor practices using the action points we identify in this article, be ready to evidence how they meet the FCA’s expectations, and keep their approach under regular review.

On 19 October 2026, the FCA published a webpage titled “AI in financial services: good practice and areas for improvement” which provides guidance for financial services firms using AI.

While firms have welcomed the FCA’s pro-innovation stance and long-standing position that it will not introduce AI-specific regulation, they have found it challenging to understand how the existing regulatory framework should apply to the use of AI in new and untested scenarios.

In this article, we highlight key areas of the guidance and set out the most important action points for firms to consider to ensure that they are meeting regulatory expectations.