A Treasury Select Committee report urges the UK to move beyond a hands-off stance on AI in financial services, calling on the FCA, Bank of England, and HM Treasury to take a more proactive role in managing AI-related risks to protect consumers.

The report flags broader stability risks, including over-reliance on a few US tech giants for AI and cloud services, and warns that AI-driven trading could exacerbate market herding and trigger a crisis in extreme cases.

MPs advocate AI-specific stress tests, clearer accountability guidance, oversight of third-party AI providers (especially non-UK ones), and stronger protections against bias, fraud, and unfair practices.

In mortgage brokerage, AI-assisted processes have improved documentation accuracy from around 80% to 99%, illustrating efficiency gains alongside regulatory concerns.

The mortgage sector's AI adoption is expanding, with governance seen as crucial to realizing potential efficiency gains from improved document accuracy.

The UK debate sits within a global context of momentum around the EU AI Act and the UK’s AI Safety Institute, underscoring the need for enforceable rules to accompany ongoing initiatives.

Regulators and government signal ongoing collaboration to balance AI benefits with consumer protection and financial stability.

While the government promotes a pro-innovation, principles-based AI strategy, MPs say ambition must be backed by decisive regulatory action and clearer oversight timelines.

Government initiatives like the AI Opportunities Action Plan and the AI Safety Institute are praised in principle, but MPs demand concrete governance to manage AI risks effectively.

Despite risks, AI is viewed as essential, with leaders noting improvements in fraud detection and risk management and about half of firms planning to increase AI investments in the next two years.

London’s fintech leadership remains strong, though AI is altering traditional regulatory oversight models and challenging existing approaches.

The discussion highlights potential benefits of AI—faster services and stronger cyber defenses—alongside significant risks and concerns about a chilling effect on high-end adoption due to liability fears.