# FPC Financial Stability in Focus: AI (Apr 2025): Financial Stability in Focus: Artificial intelligence in the financial system

Source: https://www.bankingnewsai.com/ai-regulation/documents/boe-fpc-fsif-ai-financial-system-2025
Last updated: Aug 26, 2026

The Bank of England's Financial Policy Committee published its first dedicated assessment of AI and financial stability on 9 April 2025. It identifies four risk channels — greater use of AI in banks' and insurers' core financial decision-making such as credit and insurance underwriting, greater use of AI in financial markets, operational risks from concentrated AI service providers, and a changing cyber threat environment — and commits the FPC to monitoring each. In its April 2026 Record the FPC judged that generative and agentic AI were not yet deployed at a systemically risky scale, but asked the Bank and FCA for further work on agentic AI in payments and markets.

## At a glance

| Field | Value |
| --- | --- |
| Authority | [UK (BoE / PRA / FCA)](https://www.bankingnewsai.com/ai-regulation/uk) |
| Type | Report |
| Status | Final |
| Published | Apr 9, 2025 |
| Applies to | Macroprudential assessment covering banks, insurers, market participants and AI service providers; no direct obligations |
| Official text | https://www.bankofengland.co.uk/financial-stability-in-focus/2025/april-2025 |

## Key points

- Four channels: (1) AI in core financial decision-making (credit and insurance underwriting), (2) AI in financial markets, (3) operational risk from AI service providers, (4) AI-driven cyber threats.
- Notes that AI could shift capital allocation by enabling new data sources in underwriting, with risks of correlated models and herding.
- Warns of concentration in a small number of foundation-model and cloud providers, linking to the Critical Third Parties regime.
- Sets out the FPC's monitoring approach, drawing on the BoE/FCA surveys and the AI Consortium.
- Followed up in the FPC's October 2025 and April 2026 Records; the April 2026 Record judged agentic AI presents particular risks spanning several channels.

## What changed for banks

This moved UK AI oversight from firm-level supervision to a system-level framework. It is the reference point the FPC and BoE now use to decide whether AI adoption warrants macroprudential intervention, and it explains why agentic AI and third-party concentration are the two issues UK regulators are watching most closely.

## Use cases it governs

- [AI governance (general)](https://www.bankingnewsai.com/ai-regulation/by-use-case#governance-general)
- [Trading & capital markets](https://www.bankingnewsai.com/ai-regulation/by-use-case#trading-markets)
- [Third-party & vendor AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#third-party-vendors)
- [Cybersecurity](https://www.bankingnewsai.com/ai-regulation/by-use-case#cybersecurity)
- [Credit scoring & underwriting](https://www.bankingnewsai.com/ai-regulation/by-use-case#credit-underwriting)
- [Generative & agentic AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#generative-agentic-ai)

## FAQ

### What are the Bank of England's four AI financial-stability risk channels?

AI in banks' and insurers' core decision-making, AI in financial markets, operational risk from AI service providers, and AI-driven changes to the cyber threat environment.

### Does the FPC think AI is a systemic risk today?

As of April 2026, no — it judged that generative and agentic AI are not yet deployed in a manner presenting systemic risk, but expects risks to rise, potentially rapidly.

## Related documents

- [Bailey: Frontier AI and the Question of Governance (Sep 2026)](https://www.bankingnewsai.com/ai-regulation/documents/boe-bailey-frontier-ai-governance-2026) — Frontier AI and the Question of Governance — Governor Andrew Bailey (Sep 30, 2026)
- [FCA multi-firm review: Frontier AI and cyber resilience (Sep 2026)](https://www.bankingnewsai.com/ai-regulation/documents/fca-frontier-ai-cyber-resilience-2026) — Frontier AI and Cyber Resilience (Sep 2, 2026)
- [HM Treasury Financial Services AI Adoption Plan (Jul 2026)](https://www.bankingnewsai.com/ai-regulation/documents/hmt-financial-services-ai-adoption-plan-2026) — Financial Services AI Adoption Plan (Jul 14, 2026)
- [2026 BoE/FCA AI survey](https://www.bankingnewsai.com/ai-regulation/documents/uk-ai-in-financial-services-survey-2026) — The Bank of England and FCA's 2026 AI Survey (Jun 5, 2026)
- [BoE/FCA/HMT joint statement on frontier AI and cyber resilience (May 2026)](https://www.bankingnewsai.com/ai-regulation/documents/uk-joint-statement-frontier-ai-cyber-resilience-2026) — The Bank, FCA and HM Treasury joint statement on Frontier AI models and cyber resilience (May 15, 2026)
- [BoE response to Treasury Committee AI inquiry (Apr 2026)](https://www.bankingnewsai.com/ai-regulation/documents/boe-pra-response-tsc-ai-inquiry-2026) — Response to TSC inquiry report on AI in financial services (Apr 1, 2026)
- [BoE/PRA plan for safe AI innovation (Apr 2026)](https://www.bankingnewsai.com/ai-regulation/documents/boe-pra-safe-ai-innovation-plan-letter-2026) — Letter from Sarah Breeden and Sam Woods to the Chancellor and Secretaries of State on enabling safe AI innovation (Apr 1, 2026)
- [DSIT/DBT strategic letters to regulators (Jan 2026)](https://www.bankingnewsai.com/ai-regulation/documents/gov-uk-dsit-dbt-safe-ai-innovation-letter-2026) — How will regulators enable safe AI-powered innovation: joint letter from DSIT Secretary of State and DBT Secretary of State (Jan 28, 2026)

Last reviewed Aug 26, 2026. Cite the official text (https://www.bankofengland.co.uk/financial-stability-in-focus/2025/april-2025) for the rule and this page for the summary and dates.

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