UK warns financial system unprepared for AI risks amid widespread banking use.

A UK parliamentary committee has warned the financial system is unprepared for AI-related risks, citing widespread AI use in banking and insurance—over 75% of firms now employ it—without clear regulations. Concerns include reduced transparency, financial exclusion, misinformation, fraud, and amplified market volatility due to herding and cyber threats. The report criticizes regulators for relying on outdated rules instead of proactive measures, urging AI-specific stress tests, clearer guidance by year’s end, and expanded oversight of critical US-based AI and cloud providers. It stresses the need for accountability and collaboration to balance innovation with consumer protection and financial stability.