FCA tells firms to report AI failures and near-misses

Financial firms in the UK must report significant artificial intelligence failures and near-misses under existing incident reporting rules, the Financial Conduct Authority has said. Jessica Rusu, the regulator's chief data, information and intelligence officer, set out the position at Bloomberg's UK Policy Series on Monday, in remarks reported by The Register on 20 October 2026.

Rusu said the FCA wants Britain to lead on safe AI adoption in financial services, but that greater autonomy in AI systems requires clear accountability. "Poorly governed AI can create consumer harm, cyber vulnerabilities, and operational failures, potentially at much greater speed and scale," she said. "Our rules already require firms to report major incidents, and that must extend to significant AI failures and near-misses."

A near-miss is an event that could have caused harm but did not. Rusu said that near-miss reporting for agentic AI — systems that act with limited human supervision — is becoming a national security priority, as the AI minister has recognised, and that it is also a regulatory priority.

The framing matters because of the sector's size. According to The Register, financial services contributed £223.6 billion to the UK economy in 2025, or 8 per cent of national output, the fourth highest share among OECD countries.

The FCA's comments follow similar signals from government. Last week, UK artificial intelligence minister Kanishka Narayan said the government plans to work with Parliament and technical experts to assess how the regime could be strengthened to protect Britain from AI-driven cyber threats and loss-of-control risks. "That includes identifying and reporting on serious incidents and near misses, including reducing AI-driven risk across essential services, and ensuring serious AI incidents can be properly reviewed," he said.

Also last week, Steven Adler, co-founder and chief scientist of the independent nonprofit Guidelight AI Standards, told MPs that AI oversight could borrow from aviation, where near-miss reporting is mandatory in most jurisdictions. "The way this works in aviation is that you not only want to learn about the serious crashes where someone has in fact died; you want to learn about the near-misses, because you can learn from those and help avoid them in the future," he said.

Despite the rhetoric, the legislative position is unsettled. The government has not committed to adding AI-specific measures to the Cyber Security and Resilience (Network and Information Systems) Bill. Alexandra Jones, Director General for Growth, Science and International at the Department for Science, Innovation and Technology, told MPs last week that amendments remain under consideration.

Parliament has pushed on this before. In January, the House of Commons Treasury Committee called on financial regulators to run stress tests to check that businesses are ready for AI-driven market shocks, and said there should be clear lines of accountability when AI systems produce harmful or unfair outcomes.

For firms deploying agents in trading, customer service or back-office processes, the practical consequence of the FCA's position is that an AI incident does not need to cause visible customer harm to be reportable. A failure caught before it caused loss may still fall within the scope of existing rules, on the regulator's reading.