Treasury publishes Financial Services AI Adoption Plan

HM Treasury has published an independent Financial Services AI Adoption Plan, aiming to support firms adopting AI tools while maintaining consumer protections.

It stated that the priority was establishing a clear, authoritative single source of cross-regulator guidance to allow firms to navigate requirements confidently and scale adoption consistently across the sector.

The independent report highlighted the continued financial advice gap in the UK, and noted that consumers were regularly turning to general-purpose AI tools for everyday financial planning.

However, it warned these unregulated tools often provide outputs that resemble personalised advice without meeting suitability, explainability, or accountability standards, creating a material risk.

“This creates a clear asymmetry: regulated firms face strict obligations and liability, while unregulated AI providers can scale rapidly without equivalent safeguards, undermining both consumer protection and the intent of ongoing reforms such as Targeted Support,” the report stated.

“This dynamic is already beginning to materialise, and without intervention, risks shifting trust, innovation and consumer engagement away from regulated institutions into unregulated channels.”

The paper argued that, if deployed within an appropriate regulatory framework, AI-driven advice had the potential to reshape advice provision, creating an opportunity to combine AI-driven guidance with human advice.

However, this would require clarity around the border between advice and guidance, and the introduction of proportionate guardrails.

“We have intentionally not defined or prescribed what the next phase of this regulatory framework should look like, as we recognise there are multiple viable strategic and architectural approaches that could be considered by the government, informed by regulatory expertise and evidence,” the report said.

“If done properly, this would create a level playing field across regulated and unregulated providers, unlock innovation, and allow trusted institutions to scale safe advice models.”

To support firms adopting AI, the report outlined a series of recommendations, including collaborative work from regulator to ensure expectations of firms are clear and that services are accessible and navigable to support innovation.

It also called on The Financial Conduct Authority (FCA) to undertake a review of the consumer, competition and wider impacts of financial guidance and advice-like outputs generated by general purpose large language models.

The adoption of a consistent consumer disclosure for AI-driven services was recommended, alongside the accelerated implementation of the Critical Third-Party (CTP) regime and further work on the development of a sector-wide financial services AI skills plan.

“AI is already reshaping UK financial services, improving fraud detection, streamlining core operations and sharpening risk management,” the report stated.

“The opportunity now lies in moving beyond isolated pilots to rapidly scaled AI across the entire sector to deliver tangible benefits for consumers, businesses and the wider economy.

“With high levels of digital adoption and world-class regulation, the UK financial services sector starts from a position of strength.

“Its experience in complex risks under robust regulatory frameworks makes it uniquely positioned to lead safe, responsible AI adoption globally.

“This is not an incremental opportunity; scaling AI is a strategic imperative for UK growth, competitiveness, and financial resilience.”

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