How the FCA and yyy ICO are helping innovation take off

Working together with the Information Commissioner’s Office (ICO) to help firms use AI responsibly, while protecting consumers and fostering innovation.

From AI to digital ID

From AI to digital ID, data-driven technologies are transforming financial services. And how we harness these technologies is key to delivering the Government’s mission on growth.

But innovation only succeeds when it’s underpinned by confidence to try new ideas, trust, and a joined-up regulatory approach even where it is challenging to provide clarity with the frontiers of technology moving fast.

That’s why the FCA and ICO are working closely together to support firms navigating data protection and financial regulation in a way that helps them innovate confidently.

Regulation as a bridge, not a barrier

Done right, regulation isn’t a brake on innovation. It’s a bridge, connecting creativity with public trust. With the right approach, regulation becomes an enabler: providing the certainty firms need to invest, experiment, and grow responsibly.

The FCA and ICO frequently collaborate to make it easier for firms to navigate UK financial and data protection regulations.

In 2023, we clarifiedLink is external that data protection rules don’t prevent banks from telling customers about better savings deals. Since then, firms have significantly ramped up their communications, with over 100 million savings messages sent out. A small change, but a big impact.

Similarly, we engaged firms to bust myths about barriers to sharing dataLink is external between organisations and sectors in order to prevent, detect and investigate scams and fraud. More regulatory clarity, more people protected.

Our cooperation extends to the services that we provide to innovators – ensuring that whether firms enter the FCA’s AI Lab or the ICO’s Regulatory SandboxLink is external, they can have confidence that they are getting joined-up regulatory positions.

Through the Digital Regulation Cooperation Forum (DRCF), our partnership continues to grow – for example, through the pilot of the AI and Digital HubLink is external alongside Ofcom and the Competition and Markets Authority. The DRCF is actively reviewing the pilot project and developing its refreshed offer for innovators.

Listening to the sector

When we are made aware of challenges firms face, we look to take action. The FCA’s latest joint AI survey with the Bank of England showed 85% of the 118 financial services firms surveyed were currently using or planning to use AI. 33% of firms cited data protection as a constraint on AI adoption and 20% cited FCA regulations.

That’s why we hosted a roundtable on May 9 2025 with industry leaders to better understand the challenges firms face when deploying AI, and to explore how we can support responsible innovation and personal information use.

• The message from industry was clear: regulation is not the main blocker to innovation, but uncertainty and lack of familiarity are. We want to reduce that uncertainty. We can support in building familiarity, while firms themselves are also developing their capabilities. All this means being clearer, more joined-up, and more visible with the support we offer.
• But this isn’t something regulators can do alone. We need firms and trade bodies to keep talking to us – not just when there’s a problem, real or perceived, but earlier in the innovation journey.
• We can help firms do things differently. But we need their insight to do things better.
• With regulatory agility and confidence to innovate and invest in new technologies, businesses will provide the UK with the fuel to power economic growth.