UK finance watchdog calls for firms to report AI failures and near-misses

FCA's Jessica Rusu links near-miss reporting for agentic AI to a national security priority

By LineZotpaper

Published20 October 2026

Read Time2 min

The UK's financial regulator has told firms that incident reporting must now cover significant AI failures and near-misses, warning that poorly governed artificial intelligence can cause consumer harm, cyber vulnerabilities and operational failures at greater speed and scale.

Financial Conduct Authority chief data, information and intelligence officer Jessica Rusu said at Bloomberg's UK Policy Series on Monday that the regulator wants Britain to lead safe AI adoption in financial services, and that greater autonomy requires clear accountability.

"Poorly governed AI can create consumer harm, cyber vulnerabilities, and operational failures, potentially at much greater speed and scale," she said. "Our rules already require firms to report major incidents, and that must extend to significant AI failures and near-misses. As the AI Minister has recognized, near-miss reporting for agentic AI is becoming a national security priority. It is a regulatory priority too."

Last week, UK artificial intelligence minister Kanishka Narayan said the government plans to work with Parliament and technical experts to assess how it could strengthen the regime to better protect Britain from AI-driven cyber threats and loss-of-control risks. "That includes identifying and reporting on serious incidents and near misses, including reducing AI-driven risk across essential services, and ensuring serious AI incidents can be properly reviewed," he said.

Steven Adler, co-founder and chief scientist of independent nonprofit Guidelight AI Standards, told MPs that AI oversight could learn from aviation, where near-miss reporting is mandatory in most jurisdictions. "The way this works in aviation is that you not only want to learn about the serious crashes where someone has in fact died; you want to learn about the near-misses, because you can learn from those and help avoid them in the future," he said.

The government has yet to commit to adding AI-specific measures to the Cyber Security and Resilience (Network and Information Systems) Bill. Alexandra Jones, Director General for Growth, Science and International at the Department for Science, Innovation and Technology, told MPs that amendments remain under consideration.

In January, the House of Commons Treasury Committee called on financial regulators to conduct stress tests to ensure businesses are ready for AI-driven market shocks, and said there should be clear lines of accountability when AI systems produce harmful or unfair outcomes. The UK financial services sector contributed £223.6 billion to the UK economy in 2025, or 8 percent of national output, the fourth highest share among OECD countries.

Analysis

Why This Matters

UK financial firms could face mandatory reporting obligations for AI failures and near-misses if the FCA's push is adopted, adding a compliance layer to AI deployment.
The proposal signals a shift toward treating autonomous and agentic AI as an operational risk comparable to aviation safety.
It aligns with the government's stated national security priorities around AI-driven cyber threats and loss-of-control risks.

Background

The FCA already requires regulated firms to report major incidents. The regulator now wants that regime extended to cover significant AI failures and near-misses, arguing that autonomous systems can cause harm faster and at greater scale. The move follows a January call from the House of Commons Treasury Committee for stress tests and clear accountability lines, and is being weighed alongside the government's Cyber Security and Resilience (Network and Information Systems) Bill.

Key Perspectives

FCA: Jessica Rusu framed near-miss reporting for agentic AI as both a national security and regulatory priority, arguing that learning from failures before they become serious is essential. Government: AI minister Kanishka Narayan said ministers will work with Parliament and technical experts on strengthening protections, including identifying and reporting serious incidents, but has not yet committed to amending the Cyber Security bill. Experts: Steven Adler of Guidelight AI Standards drew on aviation practice, where mandatory near-miss reporting helps prevent fatal crashes.

What to Watch

Whether AI-specific measures are added to the Cyber Security and Resilience Bill as it proceeds through Parliament.
The Treasury Committee's demand for stress tests on AI-driven market shocks and the FCA's response.
Any formal consultation or rule change from the FCA extending incident reporting to AI failures.

Sources

UK finance watchdog wants firms to report AI failures and close calls · www.theregister.com - Articles

Checked

12 claims in this story checked against 1 source: 10 supported.

Show each claim

Partly supportedThe UK finance watchdog is calling for firms to report AI failures and near-misses.www.theregister.com - Articles: “firms' incident reporting must cover significant AI failures and near-misses”
SupportedJessica Rusu links near-miss reporting for agentic AI to a national security priority.www.theregister.com - Articles: “As the AI Minister has recognized, near-miss reporting for agentic AI is becoming a national security priority.”
Partly supportedPoorly governed AI can cause harm, cyber vulnerabilities and operational failures at greater speed and scale.www.theregister.com - Articles: “Poorly governed AI can create consumer harm, cyber vulnerabilities, and operational failures, potentially at much greater speed and scale”
SupportedRusu said, “Poorly governed AI can create consumer harm, cyber vulnerabilities, and operational failures, potentially at much greater speed and scale.”www.theregister.com - Articles: “Poorly governed AI can create consumer harm, cyber vulnerabilities, and operational failures, potentially at much greater speed and scale,”
SupportedRusu said, “Our rules already require firms to report major incidents, and that must extend to significant AI failures and near-misses. As the AI Minister has recognized, near-miss reporting for agentic AI is becoming a national security priority. It is a regulatory priority too.”www.theregister.com - Articles: “Our rules already require firms to report major incidents, and that must extend to significant AI failures and near-misses. As the AI Minister has recognized, near-miss reporting for agentic AI is becoming a national security priority. It is a regulatory priority too.”
SupportedLast week, AI minister Kanishka Narayan said the government plans to work with Parliament and technical experts to assess how it could strengthen the regime against AI-driven cyber threats and loss-of-control risks.www.theregister.com - Articles: “Last week, UK artificial intelligence minister Kanishka Narayan said the government plans to work with Parliament and technical experts to assess how it could strengthen the regime to better protect Britain from AI-driven cyber threats and loss-of-control risks.”
SupportedNarayan said, “That includes identifying and reporting on serious incidents and near misses, including reducing AI-driven risk across essential services, and ensuring serious AI incidents can be properly reviewed.”www.theregister.com - Articles: “That includes identifying and reporting on serious incidents and near misses, including reducing AI-driven risk across essential services, and ensuring serious AI incidents can be properly reviewed,”
SupportedAdler said aviation near-miss reporting is mandatory in most jurisdictions.www.theregister.com - Articles: “Steven Adler, co-founder and chief scientist of independent nonprofit Guidelight AI Standards, also told MPs last week that AI oversight could learn from aviation, where reporting of near-misses is mandatory in most jurisdictions.”
SupportedAdler said, “The way this works in aviation is that you not only want to learn about the serious crashes where someone has in fact died; you want to learn about the near-misses, because you can learn from those and help avoid them in the future.”www.theregister.com - Articles: “The way this works in aviation is that you not only want to learn about the serious crashes where someone has in fact died; you want to learn about the near-misses, because you can learn from those and help avoid them in the future,”
SupportedThe government has yet to commit to adding AI-specific measures to the Cyber Security and Resilience (Network and Information Systems) Bill.www.theregister.com - Articles: “However, the government has yet to commit to adding AI-specific measures to the Cyber Security and Resilience (Network and Information Systems) Bill.”
SupportedIn January, the House of Commons Treasury Committee called for financial regulators to conduct stress tests for AI-driven market shocks and for clear accountability when AI systems produce harmful or unfair outcomes.www.theregister.com - Articles: “In January, the House of Commons Treasury Committee called on financial regulators to conduct stress tests to ensure businesses are ready for AI-driven market shocks. The committee said there should be clear lines of accountability when AI systems produce harmful or unfair outcomes.”
SupportedThe financial services sector contributed £223.6 billion to the UK economy in 2025, equal to 8 percent of national output and the fourth-highest share among OECD countries.www.theregister.com - Articles: “The sector contributed £223.6 billion to the UK economy in 2025, or 8 percent of national output. That share was the fourth highest among OECD countries.”