American bank regulators are tightening their grip on AI — and the FCA is likely watching closely
US banking regulators have significantly escalated their scrutiny of how lenders use artificial intelligence (AI), pressing financial firms on data governance, risk controls and third-party vendor exposure.
The move raises a pointed question for UK mortgage brokers and their lenders: how long before the Financial Conduct Authority (FCA) follows suit in earnest?
The US banking sector has rapidly adopted AI in recent years, expanding its use from virtual assistants to more complex functions such as regulatory monitoring and credit underwriting — and that acceleration is now drawing closer attention from regulators, who are stepping up scrutiny as cybersecurity and fraud risks multiply alongside it.
According to people familiar with the situation cited by Reuters, the current regulatory approach in the United States is focused on deepening understanding rather than imposing new rules — for now.
A formal information-gathering exercise takes shape
In April, the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) jointly issued revised interagency guidance on model risk management, clarifying that generative and agentic AI models are "novel and rapidly evolving" and therefore fall outside its scope. Rather than leave a vacuum, the three agencies committed to issuing — in the near future — a formal request for information on banks' use of AI, including generative and agentic systems.
That forthcoming request means banks must effectively self-govern AI risk with no formal rulebook in place for the foreseeable future — a posture that will be familiar to UK mortgage lenders and brokers operating in a broadly similar space.
The FCA's own long-game on AI
The FCA launched its own review in January 2026, led by executive director Sheldon Mills, into how advanced AI may affect consumers, retail financial markets and regulators over the rest of the decade. The regulator noted that AI is already embedded across financial services, and that rapid advances in generative and agentic systems could alter how markets function, how firms compete and how consumers access retail products, including mortgages.
Mills set out the review's ambition directly: "By taking a forward-looking view, the review will help the FCA continue to support innovation while promoting the safe and trusted adoption of AI in retail financial services."
The Mills Review is gathering input across four themes: how AI technology could evolve; how it could reshape market structure and UK competitiveness; how consumers may be affected; and how financial regulators may need to adapt. The FCA, Prudential Regulation Authority (PRA) and Bank of England have consistently signalled that AI will be overseen through existing regulatory frameworks rather than bespoke AI-specific rules — but political scrutiny is intensifying and supervisory expectations are rising.
Consumer Duty as the governing framework
For UK mortgage brokers, the practical implication is clear. In the absence of dedicated AI regulation, Consumer Duty remains the primary lens through which AI deployment will be judged.
Richard Pinch, senior risk director at independent financial services consultancy Broadstone, said the Mills Review sends an unambiguous signal to the market. "The challenge across the market will be to demonstrate that AI-driven models and tools align with the ethos of Consumer Duty as they evolve. Those that build strong oversight frameworks now will be better placed to innovate with confidence while meeting the FCA's expectations."
The designation of Critical Third Parties by HM Treasury and the Bank of England's focus on operational resilience mean UK firms are now directly responsible for the actions of autonomous AI, even those provided by third-party vendors. The concept of a human-in-the-loop is no longer optional for high-stakes decisions.
The Financial Policy Committee (FPC) has separately asked the Bank of England and the FCA to undertake further work on agentic AI, focused on use cases in payments and financial markets — work running in parallel to the Mills Review and suggesting the regulatory machinery is moving carefully, but with direction.
The US experience, where regulators are pressing lenders on governance and vendor risk before formal rules exist, offers a useful preview. UK mortgage brokers and their technology partners would do well to treat it as an early signal rather than a distant problem.
