# BoE response to Treasury Committee AI inquiry (Apr 2026): Response to TSC inquiry report on AI in financial services

Source: https://www.bankingnewsai.com/ai-regulation/documents/boe-pra-response-tsc-ai-inquiry-2026
Last updated: Aug 26, 2026

On 1 April 2026 Deputy Governor Sarah Breeden replied to the Treasury Select Committee's 20 January 2026 report on AI in financial services, rejecting the Committee's 'wait and see' characterisation while reaffirming a technology-agnostic, outcomes-focused approach. The letter commits the Bank and PRA to a 2026 programme — AI as a PRA supervisory priority, building further on SS1/23, the fourth biennial AI survey, an AI Consortium report, repeat industry roundtables, and FPC work on agentic AI — and says the Bank 'will not hesitate to act when justified' and keeps the need for further guardrails under review.

## At a glance

| Field | Value |
| --- | --- |
| Authority | [UK (BoE / PRA / FCA)](https://www.bankingnewsai.com/ai-regulation/uk) |
| Type | Letter |
| Status | Final |
| Published | Apr 1, 2026 |
| Applies to | Statement of the Bank of England and PRA's approach; relevant to all PRA-regulated firms |
| Official text | https://www.bankofengland.co.uk/-/media/boe/files/letter/2026/response-to-tsc-inquiry-report-on-ai-in-financial-services |

## Key points

- Responds to the TSC's January 2026 report, which had urged FCA guidance on Consumer Duty and SM&CR for AI by end-2026 and designation of major AI and cloud providers as Critical Third Parties.
- Disputes the 'wait and see' label; describes DP5/22, FS2/23, SS1/23 and the October 2025 CRO roundtables as proactive supervision.
- AI adoption is a PRA 2026 supervisory priority; PRA intends to build on SS1/23 in 2026.
- FPC's April 2026 Record: generative and agentic AI not yet systemically risky, but further work on agentic AI in payments and markets requested.
- AI Consortium (established May 2025 with the FCA) to publish a report in 2026 on third-party concentration, AI edge cases in credit and trading, generative-AI explainability, and market contagion.
- Cross Market Operational Resilience Group AI Taskforce outputs cited: AI Baseline Guidance Review (May 2025), a Shared Responsibility Model, and two AI-enabled severe-but-plausible cyber scenarios.
- Flags financial-stability risks from an AI-related asset-price correction and rising debt financing of AI infrastructure.

## What changed for banks

It is the most complete statement of where UK prudential AI policy stands in 2026: no rulebook, but a dense programme of supervision, monitoring and public-private work, with an explicit reservation of the right to add guardrails. For banks it confirms that 2026 supervisory dialogue will probe AI governance in detail.

## Use cases it governs

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

## FAQ

### Did the Bank of England agree to new AI rules after the Treasury Committee's report?

No. It reaffirmed its technology-agnostic approach on 1 April 2026 but committed to building on SS1/23, running the 2026 survey, publishing an AI Consortium report, and keeping the need for further guardrails under review.

### What did the Treasury Committee recommend on AI in January 2026?

That the FCA publish practical guidance by end-2026 on applying the Consumer Duty and SM&CR to AI, and that HM Treasury designate major AI and cloud providers as Critical Third Parties.

## 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/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)
- [PRA AI/ML model-risk roundtable (Nov 2025)](https://www.bankingnewsai.com/ai-regulation/documents/pra-mrm-roundtable-ai-ml-2025) — The PRA holds model risk management roundtable on artificial intelligence and machine learning technologies (Nov 24, 2025)

Last reviewed Aug 26, 2026. Cite the official text (https://www.bankofengland.co.uk/-/media/boe/files/letter/2026/response-to-tsc-inquiry-report-on-ai-in-financial-services) for the rule and this page for the summary and dates.

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