The UK’s Financial Conduct Authority (FCA) claims global regulators are in an “arms race” to keep up with artificial intelligence in finance and wants additional powers to regulate frontier models like ChatGPT, Claude and Gemini. The watchdog says AI is outpacing today’s rulebooks, with millions of individuals currently using these technologies to make personal finance decisions.
FCA Warns AI Risk is Outpacing Rules
Senior FCA executives warned politicians that supervisors ‘need to be able to see under the hood’ of big AI models used by banks, lenders and trading platforms, the Financial Times reported. Regulators need to understand how these computers make choices that affect credit decisions, financial advice, and fraud detection, they said. But they also warned that existing consumer protection laws are not entirely equipped to address the complicated behavior of frontier AI.
The FCA, therefore, wants clearer legal authority to seek technical information, test models, and intervene promptly when it sees major concerns.
It requires deeper cooperation with the Bank of England and the UK Treasury, which recently issued a joint statement warning that AI could “amplify cyber threats” to financial stability if misused. Firms must make AI safety central to operational resilience, not a side project, said the authorities together.
New Oversight for ChatGPT, Claude, and Gemini
The FCA’s call comes as more firms plug general‑purpose AI models such as ChatGPT, Claude and Gemini into customer‑facing tools and internal risk systems. Regulators worry that these systems could generate misleading advice, unfair decisions, or new ways for criminals to attack financial services. As a result, the FCA wants the legal right to supervise how companies build, train and deploy these models, even when the AI comes from big tech providers.
Earlier this year, FCA executive director Sheldon Mills launched a long-term review into AI in retail financial services and said, “the pace of technological advancement is extraordinary.” A Treasury Committee report has already urged the FCA to issue updated guidance by the end of 2026 so firms know how existing consumer rules apply to AI systems.
Consequently, UK‑based banks, fintechs and crypto platforms should expect much closer scrutiny of any service that leans on powerful AI models in the coming years.
READ MORE: HBAR Price Prediction as Hedera Makes Just $120k in Fees This Year
