This week, the Financial Conduct Authority (FCA) publishes examples of good and poor practice in the use of artificial intelligence (AI), with parallel initiatives to take forward recommendations from the Mills Review. The UK policy position remains unchanged. There are no new requirements for firms. For a lengthier evaluation, we highlight comparable guidance from the Financial Stability Board (FSB).
Next, the FCA revisits its review of fair value at contracts for difference (CFD) providers and concludes that firms could have gone further, with useful lessons for firms beyond this sector.
Elsewhere, we shine a light on effective market abuse surveillance within retail brokers. Meanwhile, the Bank of England consults on permitting central counterparties (CCPs) to accept letters of credit as collateral to ease liquidity pressure.
We conclude this week with the FCA’s next steps on widening consumer access to investments, with the central aim of supporting a stronger retail investment culture.
The FCA has published examples of good and poor practice in firms’ use of AI, drawn from supervision, industry engagement and its AI Lab testing.
The examples cover consumer outcomes, governance and accountability, and operational resilience. Good practice included starting from a clear consumer need, testing outcomes for customers with characteristics of vulnerability, and naming a senior manager to own each AI use case. Poor practice included shutting vulnerable customers out of AI-led services with no other route to support, claiming more for a tool than it can deliver, and adding governance after launch. The FCA will update the examples as technology evolves. This publication does not give rise to any new requirements or stipulations.
Separately, the FSB has finalised 12 non-binding sound practices for AI governance and risk.
Read more on AI in financial services: good practice and areas for improvement
Read more on building the future of finance in the age of AI
Read more on the FSB sound practices for responsible adoption of AI
The FCA has published results from a May 2026 survey of 81 CFD firms on what they changed after its November 2025 review of the Consumer Duty price and value outcome. Most firms had made or planned changes, but many were minor and did not materially change the value clients receive. Just 12% reported changing any charges.
Most firms now include all charges in their fair value assessments, and several compare themselves with UK-regulated peers rather than offshore providers. Some have added income thresholds at onboarding and stronger vulnerability monitoring. The FCA remains concerned about overnight funding charges, including on hedged positions, and about cost information that appears only in terms and conditions. It says firms have been slow to act on both the Duty and its November 2025 feedback.
The FCA expects firms to show they have reviewed their charges and will follow up where it has concerns.
Read more on contracts for difference firms: good and poor practice
Read more on the November 2025 multi-firm review of CFD price and value
The FCA has published Market Watch 86, sharing observations from visits to seven UK brokers that mainly serve retail clients. The visits focused on how firms detect and report potential insider dealing, and the FCA notes the findings may be relevant to other types of firm.
All seven firms used automated surveillance and had written procedures. Decisions were more consistent where procedures set clear escalation criteria and analysts were trained on them, with quality assurance catching errors. Good practice included testing alerts either side of their thresholds and running synthetic trades to confirm alerts trigger in the right scenarios. The FCA reminds firms that reasonable suspicion is enough to submit a suspicious transaction and order report. It expects alert settings to reflect each firm’s clients and instruments, and senior managers to understand how surveillance works. Report quality improved once firms made changes.
The four themes of alert investigation, calibration, governance and risk assessment give firms a basis for reviewing their own arrangements, and the FCA will keep testing these controls through supervision.
The Bank of England is consulting on rules that would let CCPs accept uncollateralised letters of credit from commercial banks as initial margin. The aim is to ease liquidity pressure on non-financial firms, such as energy companies, that hedge through cleared derivatives and faced sharp margin calls in 2022. Each CCP would decide whether to accept them.
The main proposals are:
CCPs would also need to validate each letter with the issuing bank, include letters of credit in stress testing and obtain the Bank’s permission. The consultation closes on 15 January 2027, with final rules due in the first half of 2027.
Read more on the review of CCP collateral rules for letters of credit
The FCA has published FS26/3, its feedback on the December 2025 discussion paper about how its rules can support a stronger retail investment culture. The FCA wants more people to invest with confidence while retaining safeguards around higher-risk products, and will phase its reforms rather than pursue them all at once.
Next steps include checking that the promotion rules for high-risk investments apply consistently to products carrying similar risks. A consultation on risk information for mainstream investments will follow in early 2027 supported by consumer testing. The FCA will also look at how appropriateness assessments operate and whether other models would work better, engaging with stakeholders in 2027. Findings from its multi-firm review of model portfolio service manufacturers are due by the first quarter of 2027.
Read more from the FCA on FS26/3
Read more on FS26/3: expanding consumer access to investments
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