The FCA's AI Live Testing initiative provides a voluntary, structured program for firms with mature AI proofs-of-concept (POCs) to test AI-driven services in controlled real-world environments under regulatory oversight and support from technical partner Advai. This matters because it enables safe progression from 'POC paralysis' to deployment, while helping the FCA gather insights on translating AI principles into consumer and market protections, informing future regulation. Participation enhances firms' governance, risk management, and evaluation frameworks for responsible AI use in financial services.
What Changed
This is not a mandatory regulatory change but a voluntary testing service launched by the FCA; no new enforceable requirements are imposed. Key elements include a holistic focus on the AI system (model + deployment context, risks, governance, human-in-the-loop, evaluation, input/output controls) rather than isolated foundation models. The program features three phases: Discovery, Framework validation, and AI system testing (quantitative/qualitative), emphasizing live monitoring, governance, and risk management. It complements the FCA's Supercharged Sandbox for earlier-stage AI exploration.
What You Need To Do
- Review FCA's Terms of Reference (PDF) for eligibility, focusing on mature POCs and enterprise-level AI systems
- Submit application form via FCA portal by 2 March 2026 if ready for live testing; contact suptech@ fca
- Prepare documentation on AI system components (model, context/risks, governance, human oversight, evaluation, controls) for three-phase process
- Assess internal governance, data, risk frameworks, and monitoring for AI readiness; consider non-participation but monitor for future FCA expectations
- Firms not selected should use insights from first cohort (e
Key Dates
19 January 2026 - Second application window opens.
2 March 2026 - Application deadline for second cohort. DEADLINE
Mid-March 2026 - Notification of successful applicants.
April 2026 - Testing starts for second cohort.
October 2025 - First cohort began testing (historical reference).
Compliance Impact
Urgency: Medium - Voluntary program, but signals FCA's proactive stance on AI oversight; non-participation risks lagging in best practices for Consumer Protection / Conduct and Operational Resilience / Outsourcing as regulator builds evidence for potential rules. Matters for competitive edge in AI deployment and demonstrating alignment with principles-based regulation amid 'POC paralysis'. Early movers gain tailored support, intelligence-sharing on risks, and influence on FCA's evolving AI approach.