Briefing: Rising AI uptake drives demand for sector-wide skills update

In January 2026, the Treasury Committee published a report entitled Artificial intelligence in financial services. This raised concerns that major public financial institutions such as The Bank of England, the FCA and the Treasury are not doing enough to manage the risks represented by the increasing use of artificial intelligence (AI) in the financial services sector.

The report referenced evidence that more than 75% of UK financial services firms are now using AI, with insurers – alongside international banks – having the most significant take up of AI technology.

While the report was clear in recognising that AI and other technological developments can bring significant benefits to end customers, it also suggested that there ought to be practical guidance available that helps firms apply consumer protection rules to their usage of AI.

In September 2025, the Chartered Insurance Institute (CII) convened a roundtable to explore how AI is being used to identify and support vulnerable customers, reflecting on the associated risks and opportunities. Attendees included industry representatives, as well as regulatory, ethics and technology experts.

The FCA’s Consumer Duty regulation requires market firms to evidence how they are delivering consistently good outcomes for customers. From the aforementioned roundtable, we noted that the rapid emergence of AI is prompting many firms to consider how best to harness the technology in order to enhance their identification of customer vulnerabilities and deliver better levels of support.

During the roundtable, participants agreed that AI delivers the greatest value when it augments human judgement rather than replaces it – acting as a safety net that provides an additional layer of support.

Attendees suggested that this usage is particularly beneficial in terms of supporting vulnerable customers, with firms using AI to develop objective assessment frameworks that help to identify vulnerability systematically.

Roundtable guests also recognised that firms deploying AI must provide ongoing AI literacy training programmes in order to ensure they have AI fluent and ethical humans in the loop operating AI tools.

This would help to ensure that the AI technologies firms deploy are unbiased and are being used for the right reasons.

The report that the CII issued summarising the key points from last September’s roundtable articulated a number of guiding principles that should be considered across all phases of AI implementation.

In terms of internal preparedness, we suggested that successful AI implementation in financial services businesses would require more than technical deployment, therefore teams must be trained to interpret AI outputs critically, challenge recommendations when they appear inconsistent with individual circumstances and respond to customers with empathy.

Gap in soft skills?

Consideration around the need to develop appropriate skills in the workforce around the deployment of AI tools is a topic being explored by the Financial Services Skills Commission (FSSC).

The FSSC issued a report in May 2025, entitled Unlocking AI’s potential: The skills that matter, which summarised that financial services will be the sector most impacted by AI.

Similar to the observations shared at the CII’s roundtable, the FSSC report set out that AI will make a big difference to the way that customers are served by the financial services sector, unlocking significant growth potential – but only if training programmes to address existing skills gaps, particularly around adaptability, relationship management and empathy, are implemented.

These supporting soft skills will complement the specialist technical skills required to maximise the potential of AI.

Towards the end of 2025, the FSSC was further commissioned by HM Treasury to produce an additional report on the impact of AI on the financial services workforce and skills.

To aid in the development of this new report, the FSSC is currently engaging in research that assesses what skills will be required if the sector is to be effective in driving growth and productivity through its adoption of AI technologies.

I attended an insurance subsector roundtable as part of the FSSC’s engagement with the wider financial services sector, aiding its research activity. This engagement reflects a growing recognition that sector-wide collaboration is essential to ensure AI is deployed responsibly and effectively.

The FSSC is committed to ensuring that this research is robust and draws on perspectives from across the whole sector. It has already completed a sector-wide call for evidence.

As AI continues to reshape financial services, the sector must balance innovation with responsibility.

Insurers have a particular opportunity to lead the way by embedding AI within robust governance frameworks, investing in workforce skills and ensuring that technology enhances — rather than replaces — human judgement.

By doing so, the industry can unlock AI’s full potential while protecting customers, strengthening trust and delivering the outcomes the Consumer Duty demands.