The FCA is to open applications for a second cohort of live AI testing in January, with participating firms able to start testing in April.

The project is designed to help the regulator better understand how AI could shape UK financial markets and inform its future approach to AI technology.

The AI live testing is running alongside the FCA’s Supercharged Sandbox, which helps firms who are in the experimental phase with their use of AI.

For the testing, the FCA has partnered with Advai, a UK-based company specialising in automated testing, evaluation and assurance of AI systems, providing independent technical evidence. 

In the first phase of testing, the firms to take part were Gain Credit, Homeprotect, Natwest, Monzo, Santander, Scottish Widows and Snorkl.

The majority of the AI applications being tested by the project so far have focused 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, said: “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.” 

The FCA said the testing is helping firms to address key questions around evaluation frameworks, live monitoring governance and risk management to ensure that AI is deployed safely and responsibly for consumers and markets. 

According to a recent report from NextWealth, 8 out of 10 financial advice firms see compliance and regulation, and a lack of a structured due diligence framework, as barriers to AI adoption.

It showed that 79% of all firms surveyed believe it poses a barrier to adoption, 19% of which view it as a very significant barrier. That rose to 23% for sole traders.