On 24 June 2026, United Kingdom Financial Conduct Authority Chief Executive Nikhil Rathi set out the regulator's evolving approach to artificial intelligence, agentic finance, tokenisation and financial market resilience during his keynote address at tech UK's Agents of Change: Generative and Agentic AI in Financial Services 2026. The speech signals a shift in the FCA's supervisory philosophy, recognising that technological innovation is progressing faster than traditional regulatory frameworks. Rather than relying solely on detailed rulemaking, the FCA intends to place greater emphasis on competition, collaboration, system wide oversight and regulatory innovation. The address also highlights tokenisation, agentic artificial intelligence and digital financial infrastructure as strategic priorities for the future of the United Kingdom financial services sector.
FCA Positions Financial Services at the Centre of the United Kingdom's AI Strategy
Mr Rathi stated that financial services will play a central role in making the United Kingdom a leading artificial intelligence economy by providing the capital, infrastructure and trust required for wider AI adoption across the economy.
He observed that more than 80 per cent of financial services firms are already adopting artificial intelligence, with the next challenge centred on scaling its deployment across financial markets.
Agentic Artificial Intelligence Marks the Next Phase of Financial Services
The FCA identified agentic artificial intelligence as the next stage in financial market development.
Unlike generative artificial intelligence, which primarily supports summarisation, analysis and automation, agentic systems are expected to coordinate decisions, execute transactions and manage financial activities with greater autonomy.
According to the FCA, potential applications include:
- Personalised investment strategies.
- Automated bill management.
- Liquidity management.
- Trading workflow optimisation.
- Other market infrastructure functions.
Mr Rathi emphasised that accountability for regulated activities must remain with authorised firms and that meaningful human oversight will remain essential to maintaining investor confidence.
FCA Highlights Tokenisation as Critical Financial Infrastructure
The speech identifies tokenisation as another major area of regulatory focus.
Mr Rathi stated that tokenisation has the potential to reduce costs, lower operational risk and support programmable financial infrastructure capable of supporting increasingly automated financial markets.
He referred to the FCA's recent approval of the United Kingdom's first natively tokenised authorised fund, launched by Baillie Gifford in partnership with Bank of New York Mellon, and encouraged stakeholders to respond to the FCA and Bank of England's Call for Input on tokenised wholesale markets.
FCA Signals Shift Towards Principles Based AI Regulation
The speech outlines a broader evolution in the FCA's supervisory approach.
Mr Rathi stated that legislation will not keep pace with the speed of technological development and that traditional rulemaking alone will be insufficient to regulate emerging technologies.
Instead, the FCA intends to strengthen its focus on:
- Competition.
- Regulatory collaboration.
- Supervisory intelligence.
- Innovation.
- System wide risk management.
The FCA also confirmed that it is exploring the use of agentic artificial intelligence as a first responder to strengthen wholesale market surveillance and accelerate the detection of market abuse using large scale data analytics.
Competition and System Wide Powers to Play Greater Role
The FCA indicated that artificial intelligence is expected to lower barriers to entry and accelerate competition across financial markets.
Mr Rathi stated that the regulator's role is not to protect incumbent firms but to ensure that competition operates effectively for consumers and the wider economy.
He also indicated that the FCA expects to make more frequent use of its system wide powers under legislation including the Enterprise Act and the Digital Markets, Competition and Consumers Act where necessary to support market integrity.
Resilience and Third Party Dependencies Remain Regulatory Priorities
The speech highlights increasing reliance on cloud providers, artificial intelligence model developers and data providers as a growing source of systemic risk.
The FCA noted that technology and cyber incidents accounted for approximately 98 per cent of operational incidents reported to the regulator during the previous year.
Mr Rathi stated that firms should strengthen governance over third party dependencies and prepare for greater scrutiny under the United Kingdom's Critical Third Parties regime.
The FCA also emphasised the importance of collaboration between financial institutions, technology providers, telecommunications companies and public authorities in responding to fraud, cyber threats and emerging artificial intelligence risks.
FCA Expands Artificial Intelligence Innovation Initiatives
To support responsible innovation, the FCA outlined several ongoing initiatives, including:
- The Supercharged Sandbox, enabling firms to test artificial intelligence solutions using real world data and computing resources.
- The FCA AI Lab, including a newly established Agentic Academy.
- The AI Consortium established jointly with the Bank of England.
The regulator also confirmed that additional publications are expected later this year, including guidance on good and poor artificial intelligence practices and the forthcoming Mills Review examining the future of artificial intelligence in retail financial services.
Regulatory Significance
The speech provides one of the clearest indications to date that the Financial Conduct Authority is moving beyond a rules based approach towards a supervisory model centred on technological innovation, market resilience and regulatory collaboration.
For financial institutions, fintech firms, digital asset businesses and artificial intelligence developers operating in the United Kingdom, the address signals that future regulation is likely to focus less on prescriptive requirements and more on governance, accountability, operational resilience and system wide risk management as artificial intelligence becomes increasingly integrated into financial markets.
(Source: https://www.fca.org.uk/news/speeches/rethinking-regulation-age-ai)
