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The UK’s Financial Conduct Authority (FCA) and Information Commissioner’s Office (ICO) have jointly issued a ‘Dear CEO’ letter to trade association leaders, responding to regulatory uncertainty surrounding artificial intelligence (AI) in financial services.
The letter, signed by the Information Commissioner John Edwards and FCA chief executive Nikhil Rathi, outlines plans for a high-level roundtable to address these challenges and ensure that firms can innovate with confidence while remaining compliant with UK financial and data protection regulations.
The letter reinforces the regulators’ intention to take a proactive approach to address AI-related concerns and ensure the UK remains a global competitor for financial innovation.
It follows recent communications with the UK government regarding how regulators can encourage growth.
As AI deployment in financial services accelerates, both regulators have emphasised their commitment to fostering responsible innovation.
A team effort
The FCA and ICO have a history of collaboration, including participation in FCA TechSprints, joint statements on customer communications and engagement in the Digital Regulation Cooperation Forum’s (DRCF) AI and Digital Hub pilot.
They also say that they align with the UK government’s broader push to promote economic growth through regulatory cooperation.
However, a recent FCA and Bank of England survey found that data protection and the FCA’s Consumer Duty rules are among the top three regulatory barriers to AI adoption in financial services.
According to the Dear CEO letter, this suggests that firms operating in the UK may lack confidence in navigating what can be a complex intersection between AI, data protection expectations and financial regulation.
To address these concerns, the FCA and ICO have committed to hosting an industry roundtable in London on May 9, 2025.
The event is intended to provide a platform for financial services leaders to discuss key regulatory uncertainties, explore ways the two regulators can enhance industry support and identify specific areas where firms need further guidance to drive innovation.
Valuable stakeholder engagement
Matt Worsfold, a partner at law firm Ashurst, explained that the regulators’ letter “is the latest in a period of engagement with the industry stakeholders on the topic of AI”.
“With an imperative from the UK government to facilitate growth and innovation, the ICO and FCA are looking to understand the barriers to AI adoption, and in turn what might need to be done around clarifying areas around the intersection of the regulatory regimes in order to drive the use of AI,” he said.
Worsfold added that both regulators are “looking to enable the realisation of the benefits that AI is envisaged to bring to financial services firms and ultimately their customers, whilst balancing good customer outcomes and protecting personal data”.
This intervention comes at a time when firms are already wrangling with the extra-territorial reach of the EU’s Artificial Intelligence Act, as well as the patchwork of guidance, standards and regulatory frameworks that exist in the UK.
