Britain needs ‘AI stress tests’ for financial services, lawmakers say

UK financial firms heavily reliant on US tech giants for AI services. (Reuters)
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Updated 20 January 2026
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Britain needs ‘AI stress tests’ for financial services, lawmakers say

  • Lawmakers urge AI-specific stress tests for financial firms

LONDON: Britain’s financial watchdogs are not doing enough to stop artificial ​intelligence from harming consumers or destabilising markets, a cross-party group of lawmakers said on Tuesday, urging regulators to move away from what it called a “wait and see” approach.
In a report on AI in financial services, the Treasury Committee said the Financial Conduct Authority and the Bank of England should start running AI-specific stress tests to help firms prepare for market shocks triggered by automated systems.
The committee also called on the FCA to ‌publish detailed guidance ‌by the end of 2026 on how ‌consumer ⁠protection ​rules apply to ‌AI, and on the extent to which senior managers should be expected to understand the systems they oversee.
“Based on the evidence I’ve seen, I do not feel confident that our financial system is prepared if there was a major AI-related incident and that is worrying,” committee chair Meg Hillier said in a statement.

TECHNOLOGY CARRIES ‘SIGNIFICANT RISKS’

A race among banks to adopt agentic AI, which ⁠unlike generative AI can make decisions and take autonomous action, runs new risks for retail customers, the ‌FCA told Reuters late last year.
About three-quarters ‍of UK financial firms now use ‍AI. Companies are deploying the technology across core functions, from processing insurance claims ‍to performing credit assessments.
While the report acknowledged the benefits of AI, it warned the technology also carried “significant risks” including opaque credit decisions, the potential exclusion of vulnerable consumers through algorithmic tailoring, fraud, and the spread of unregulated financial advice through AI chatbots.
Experts ​contributing to the report also highlighted threats to financial stability, pointing to the reliance on a small group of US tech ⁠giants for AI and cloud services. Some also noted that AI-driven trading systems may amplify herding behavior in markets, risking a financial crisis in a worst-case scenario.
An FCA spokesperson said the regulator welcomed the focus on AI and would review the report. The regulator has previously indicated it does not favor AI-specific rules due to the pace of technological change.
The BoE did not respond to a request for comment.
Hillier told Reuters that increasingly sophisticated forms of generative AI were influencing financial decisions. “If something has gone wrong in the system, that could have a very big impact on the consumer,” she said.
Separately, Britain’s finance ‌ministry appointed Starling Bank CIO Harriet Rees and Lloyds Banking Group ‘s Rohit Dhawan as “AI Champions” to help steer AI adoption in financial services. 


Macron to set out how France’s nuclear arms could protect Europe

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Macron to set out how France’s nuclear arms could protect Europe

PARIS: France will on Monday unveil how it could use the European Union’s only atomic arsenal to protect the continent in an unstable world, with Russia becoming increasingly aggressive and the United States turning away.
The speech by French President Emmanuel Macron, at France’s Ile Longue nuclear submarine base, comes after the launch of US and Israeli attacks against Iran in a campaign that risks destabilising the Middle East.
“What we are experiencing demonstrates that in the world to come, power and independence will be two indispensable forces for dealing with the proliferation of threats,” said a member of Macron’s team.
Macron is set to update France’s nuclear doctrine as Russia’s war against Ukraine grinds into a fifth year and NATO allies worry about Washington’s wavering commitment to Europe.
“There will undoubtedly be some significant shifts and developments,” a source said of the speech set to be delivered from 1415 GMT Monday.
European nations, which have relied on the US nuclear deterrent throughout the Cold War and in the decades since it ended, are increasingly debating whether to bolster their own atomic arsenals.
Paris has been in talks with countries including Germany and Poland over how France could use its atomic arsenal to help protect the continent.
Last year, Macron said he was ready to discuss possible deployment of French aircraft armed with nuclear weapons in other European countries.
Macron said in February he was considering a doctrine that could include “special cooperation, joint exercises, and shared security interests with certain key countries.
France maintains the world’s fourth-largest nuclear arsenal, estimated at around 290 warheads. Britain, which is no longer a member of the EU, is the only other European nuclear power.
By contrast, the United States and Russia, the world’s two main atomic powers, have thousands of nuclear warheads each.

‘27 buttons’

Reassurances from US officials that Washington’s deterrent would continue to cover Europe under the NATO alliance have done little to quell European fears of fickleness under US President Donald Trump.
“It is clear that we will need to reflect together on how French and British deterrence can fit into a more assertive European defense,” Bernard Rogel, who served as top military adviser to Macron, told AFP.
But how exactly nuclear cooperation would work between the EU’s 27 states is another story.
Rogel insisted that control over the launch decision will remain in French hands.
“I can’t see us having 27 buttons. From a credibility standpoint, that just doesn’t work,” he said.

‘Only a good thing’

Rafael Loss, a policy fellow at the European Council on Foreign Relations, said leaders should find confidence in European support for strengthening nuclear deterrence.
He said people in Denmark, Estonia, Germany, Portugal, Spain and Switzerland now tend to support rather than oppose the idea of developing an alternative European nuclear deterrent.
“If there’s going to be some kind of bigger European investments in France or UK’s nuclear deterrence, that’s only a good thing,” Finland’s defense minister Antti Hakkanen told AFP in February.
Florian Galleri, a historian specializing in nuclear doctrines, warned that Macron would have to tread carefully, pointing to his low approval ratings one year before the end of his presidency.
Macron’s address could also spark a backlash ahead of the 2027 presidential election, in which Marine Le Pen’s euroskeptic far-right is seen as having its best chance yet at winning the top job.
“There is a consensus on possessing nuclear weapons in France, but not on nuclear policy,” Galleri said.
The far-right has already issued a warning.
“If Mr. Macron thinks he can give France’s nuclear weapon to the EU, he will face impeachment proceedings for treason,” Philippe Olivier, an adviser to Le