FCA launches AI Live Testing with major UK banks to deploy AI under regulatory supervision

FCA commences live testing of AI applications from the financial sector

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. The initiative - which was first aired in April - will see participating firms receive tailored support from the FCA's regulatory team and its technical partner Advai to develop, assess and deploy safe and responsible AI. Gain Credit, Homeprotect part of the Avantia Group, NatWest, Monzo, Santander, Scottish Widows part of Lloyds Banking Group and Snorkl are the first group to take part. Many of the AI applications currently being tested as part of the project focus on retail financial services including use cases to harness AI to support debt resolution or provide financial advice. Applications are also exploring the potential for AI to help improve customer engagement, streamline complaints handling and help consumers to make smarter spending and saving decisions. Jessica Rusu, chief data, information and intelligence officer at the FCA, says: "Our new AI Live Testing service helps firms who are ready to use AI in live markets. By working closely with firms and our technical partner Advai, we're helping to make sure that AI is developed and deployed safely and responsibly in UK financial markets." Applications for the second cohort for AI Live Testing will open in January 2026 and participating firms will be able to start testing in April.

UK Regulator FCA Launches Supervised AI Trials for Banks | PYMNTS.com

AI Live Testing builds on the FCA's earlier efforts to foster innovation while maintaining oversight. In June 2025, the FCA launched a Supercharged Sandbox in partnership with Nvidia, giving firms access to advanced computing infrastructure, regulatory guidance, and a controlled environment in which to experiment with AI prototypes. That sandbox welcomed firms that "lack the capabilities to do so," according to FCA Chief Data Officer Jessica Rusu, as reported by PYMNTS. In October 2025, the FCA further expanded its innovation agenda by joining forces with Raidiam to help firms simulate and test data-sharing flows under open-finance frameworks. This step reflects the broader shift toward open data and smarter financial services infrastructure. AI Live Testing now represents the next phase of that trajectory: rather than just experimenting with AI in a sandbox or data-sharing overlays, firms can test AI in live operations under supervised, regulated conditions. The shift reflects a change in regulatory posture. "There needs to be a different relationship between regulator and regulated," FCA chief executive Nikhil Rathi said. "We are not going to come after you for everything that goes wrong. What we will be concerned about is egregious failures that are not dealt with." His comments underscore the FCA's effort to foster a climate in which firms can deploy AI while openly engaging regulators on risks, flaws, and unexpected model behavior. First Cohort Will Test Real-World Use Cases The first group of firms accepted into AI Live Testing includes NatWest, Monzo, Santander, Gain Credit, Homeprotect (part of Avantia Group), Scottish Widows (part of Lloyds Banking Group), and Snorkl. The firms plan to deploy AI in customer-facing areas, including debt resolution, financial advice, customer service automation, complaint handling, and personalized spending and savings guidance. Working under the supervision of the FCA and Advai, firms will evaluate how AI performs on fairness, accuracy, consumer outcomes and operational resilience. FCA officials said the program will help generate insights into how AI affects market behavior, consumer protection, operational risk, and could inform future regulation. Jessica Rusu said the FCA intends for AI Live Testing to support the responsible deployment of AI while enabling innovation and growth across the financial sector. Applications for the second cohort will open in January 2026, with testing expected to begin in April. The FCA plans to publish a full evaluation after 12 months of testing.