Financial Conduct Authority outlines AI era regulatory approach focused on competition collaboration and system-wide resilience

In a speech at techUK’s Agents of Change event, Financial Conduct Authority Chief Executive Nikhil Rathi said the FCA is rethinking what effective regulation means in the age of artificial intelligence as adoption becomes widespread across financial services. He said the regulator will place greater emphasis on competition, collaboration and system-wide risk awareness, rather than relying only on traditional rulemaking, as agentic AI and tokenisation begin to change how markets operate. The speech also stressed that accountability for regulated activities must remain clear, with appropriate human oversight where AI systems support or make financial decisions. Rathi said the FCA is exploring agentic AI as a first responder for wholesale market monitoring, combining supervisory judgment with large internal data sets to identify market abuse more quickly. He also said faster-moving AI-driven markets will make the FCA’s competition objective and system-wide powers more important, with those powers expected to be used more frequently where needed. On market infrastructure, he pointed to banks’ work on tokenised deposits, the recent approval for Baillie Gifford and Bank of New York Mellon to launch the United Kingdom’s first natively tokenised authorised fund, and joint work with the Bank of England on the direction of tokenised wholesale markets. The speech also highlighted rising resilience risks from dependence on cloud, model and data providers, alongside fraud and cyber threats, and said boards should map and govern those dependencies carefully. As next steps, the FCA noted that its Call for Input on tokenised wholesale markets closes next week. Rathi also said the regulator expects to publish the Mills Review on how AI could reshape retail financial services in the coming weeks, followed later in the year by a publication on good and poor AI practice.