UK backs 10-point AI plan for financial services

The UK government has endorsed a 10-point plan to increase the use of artificial intelligence in financial services, accepting recommendations addressed to government and pledging to work with regulators and industry on implementation. The plan, produced by Lloyds head of AI Rohit Dhawan and Starling Bank chief information officer Harriet Rees, focuses on regulation, third-party risk, disclosures, skills and emerging payment models.

Dhawan and Rees were appointed by the government in January as AI champions for financial services, with a mandate to report directly to Lucy Rigby, the Economic Secretary to the Treasury. Their remit was to help firms capture the potential of AI, identify areas where innovation could proceed faster, support safe adoption at scale and examine barriers that may be slowing deployment.

The recommendations cover the regulatory framework for AI and the boundaries of regulated activity, according to the government publication. They also call for more consistent consumer disclosure when services use AI, a point that would affect how firms explain AI-driven products and decisions to customers.

A further recommendation concerns the rollout of the UK’s Critical Third-Party regime for AI and cloud providers. That framework gives financial regulators oversight of some external technology suppliers whose services may be important to the resilience of banks, insurers and other regulated firms.

The plan also proposes voluntary sharing of AI incidents and near misses across the sector. Such a mechanism would allow firms to exchange information about failures or risks without waiting for a broader disruption, with the aim of improving controls and supervisory awareness.

Third-party assurance and skills

Dhawan and Rees also recommend a voluntary, industry-led third-party assurance scheme for AI in financial services. The proposal would sit alongside commitments to build AI skills across the sector and reduce barriers to attracting global AI talent.

The recommendations include ensuring readiness for agentic payments, a term used for payment tools in which AI agents can take a more active role in initiating or completing transactions within defined controls.

In her Mansion House speech this week, Chancellor of the Exchequer Rachel Reeves described AI as the “defining technology of our generation.” Reeves also said that UK businesses could access new AI payment tools from the same day, with Mastercard choosing the UK as the first European market for the launch of new agentic payments.

Digital bond and open banking measures

Reeves used the same speech to set out other financial technology measures. She said the UK is on course to become the first G7 country to issue a Digital Sovereign Bond by early next year, with plans for later issuance to follow.

The government is also preparing the long-term legislative framework for Open Banking. Open Banking Limited has been selected to convene and coordinate the next phase of establishing the Future Entity, which is intended to support the next stage of the UK’s open banking system.

Henk Van Hulle, chief executive of Open Banking Limited, said the move was “an essential milestone in the evolution of the UK’s Open Banking ecosystem.” He said industry participants were working on a framework suited to future needs and that progress on the matters under consultation would help reinforce current momentum.

Van Hulle said Open Banking had changed how millions of consumers and businesses manage and move money every day. He added that, as adoption grows, the regulatory framework should provide greater clarity, support sustainable commercial models and create conditions for continued innovation and competition.

This story draws on original reporting from Finextra Research.