The United Kingdom has two financial regulators: the FCA (Financial Conduct Authority) and the PRA (Prudential Regulation Authority).

Both the FCA and the PRA have authorisation (licensing) powers to permit firms to carry on regulated financial activities.

The PRA is part of the Bank of England. It authorises and regulates banks, building societies, credit unions, and insurers that could pose systemic or prudential risks to the UK economy. Firms authorised and regulated by the PRA are also regulated by the FCA for conduct issues (“dual regulated firms”).

The majority of UK financial services firms are authorised (and regulated) only by the FCA (“solo regulated firms”).

Currently, the PSR (Payment Systems Regulator) also operate as an independent subsidiary of the FCA responsible for overseeing payment systems (but not for authoring or directly regulating individual firms). The PSR is in the process of being abolished and its powers transferred to the FCA.

The UK regulatory structure under which the FCA has regulatory authority over all authorised financial sector firms (including PRA authorised firms) already addresses the traditional lines between activities such as lending and wealth management. Some digital assets which were already categorised as “Specified Investments” (for example. digital assets that have the same characteristics as shares and other securities) have long fallen into the regulatory regime. As from 25 February 2026 other cryptoassets (such as stablecoins) have been brought into the regulatory regime.

“cryptoassets” are defined as:

“…. any cryptographically secured digital representation of value or contractual rights that: –

(a) can be transferred, stored or traded electronically, and

(b) that uses technology supporting the recording or storage of data (which may include distributed ledger technology).”;

The Financial Services and Markets Act 2023 and the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025 (and other legislative and regulatory) changes are now bringing firms dealing and providing services in respect of crypto assets within the wider regulatory regime, requiring FCA authorisation and making them subject to FCA rules and supervision in the same way as other firms carrying on traditional financial services activities.

The UK remains a leading global fintech hub, but several headwinds may slow innovation and growth. First, the post Brexit loss of EU passporting continues to hinder cross border expansion, requiring separate authorisations across the EEA and increasing cost and friction. Second, the regulatory pipeline is intensifying: firms must prepare simultaneously for the UK’s new cryptoassets regime (authorisation from September 2026), BNPL regulation (from July 2026), strengthened safeguarding rules for payments and e money firms (May 2026), evolving AI governance expectations, and ongoing Consumer Duty supervision. This cumulative compliance burden risks diverting resources from product development.

Operational and cyber resilience expectations are also rising. The Cyber Security and Resilience Bill widens regulatory scope to third party technology providers, introduces 24 hour incident reporting, and imposes significant penalties, while forthcoming Bank of England and PRA consultations on ICT and cyber risk management will add further obligations. At the same time, geopolitical and sanctions risks – particularly in the digital assets sector – are increasing, with OFSI’s recent threat assessment signalling a more aggressive enforcement posture through 2026.

Finally, although the UK remains Europe’s fintech leader, investment has softened: total funding fell to £8bn in 2025, a 21% decline. Higher interest rates, investor caution and geopolitical uncertainty are likely to persist, with firms facing heavy regulatory implementation costs likely to feel this most acutely.

A fintech carrying on a “regulated activity” (as set out in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (“the Regulated Activities Order”)) is required to be FCA (or in some cases PRA) authorised (unless it falls within an available exemption). Some other fintech activities (even if not regulated activities requiring authorisation) can also require registration for AML purposes.

Lending activities to “consumers” (including some categories of small businesses) is a regulated activity, but not lending to companies and other larger businesses. Providing payment services (within the EU’s Second Payment Services Directive, which still applies in the UK post Brexit but now as UK “assimilated law”) is a regulated activity. Arranging deals in regulated investments (which includes some digital assets), and safeguarding and administering investments have long been regulated activities.

The recent legislative changes have extended regulation to the following activities:

• Issuing qualifying stablecoin in the United Kingdom.
• Safeguarding of qualifying cryptoassets and relevant specified investment cryptoassets.
• Arranging for another person to safeguard qualifying cryptoassets or relevant specified investment cryptoassets.
• Operating a qualifying cryptoassets trading platform.
• Dealing in qualifying cryptoassets as principal.
• Dealing in qualifying cryptoassets as agent.
• Arranging (bringing about) deals in qualifying cryptoassets.
• Making arrangements with a view to transactions in qualifying cryptoassets.
• Qualifying cryptoasset staking.

For most financial services firms (i.e. apart from firms such as banks and insurers required to be authorised by the PRA), the FCA is the sole authorising and regulating authority.

Authorisation is based on categories of “permissions” (known as Part 4A Permissions). An authorised firm will apply for permission to carry on those specified activities relevant to its business, by reference to the Regulated Activities Order. For example, a lender requires permission to carry on the regulated activity of entering into a regulated credit agreement as lender (or entering into a regulated mortgage contract as lender), whereas a crypto platform would require permission for the operation of a qualifying cryptoasset trading platform. There are between 63 and 80 distinct regulated activities (depending on how sub‑activities and exclusions are categorised requiring FCA authorisation (or PRA authorisation for some banking and insurance activities), each requiring its own permission.

So the UK operates a “single window” approach to authorisation (licensing) (even where dual authorisation (PRA and FCA) is required), but requires different conditions to be satisfied for different types of activities, ranging from “light touch”, where minimal regulatory capital and other requirements will apply to heavier requirements (such as for deposit taking and other banking activities), where there is a risk of consumer harm or damage to the UK’s financial systems where far more stringent conditions for grant of permission will apply.

In late 2024 and 2025, the FCA significantly expanded its use of both infrastructure level and digital sandboxes, notably through the Digital Securities Sandbox for capital markets infrastructure and the Supercharged Sandbox for AI. These initiatives increasingly support incumbents and market wide systems, not just early stage start ups.

At the same time, the FCA’s regulatory and digital sandboxes now operate as standing, always open infrastructure rather than time limited pilots. While experimentation remains central, the practical impact has shifted towards earlier regulatory engagement and smoother authorisation pathways giving participants enhanced credibility with investors.

In parallel, the FCA has introduced “minded to approve” signals within the authorisation process, which firms, including sandbox participants, may use in capital raising discussions prior to full licensing, creating a tangible capital formation effect without formal regulatory endorsement.

The FCA actively encourages regulated firms to experiment, develop, test AI to drive innovation and use RegTech to improve their own, internal, compliance processes It believes that developments in RegTech could benefit consumers and the wider financial services sector (in particular: by helping regulated firms to fulfil their regulatory obligations; for detecting and preventing financial crime; to facilitate financial inclusion and digital ID: and as part of the drive for open banking).

The FCA (together with the PRA) is currently in Phase 3 of its DRR (Digital Regulatory Reporting) initiative started in 2017. In 2020 the FCA and PRA jointly announced their plans to develop their data and analytics capabilities and for the FCA “to become a highly data-driven regulator”. This programme has the objective of eventually creating machine readable regulation (MRR) and machine executable regulation (MER). As part of this initiative the FCA’s advanced analytics and data science units are currently exploring how the FCA can use generative AI to change the way it regulates by processing information faster, uncovering new insights and improving decision making. As of now, no specific initiatives to implement DRR, MRR or MER have yet been officially announced.

The FCA was previously reported (in 2023) to have developed its own SupTech (supervisory technology, which is developing as a separate area from FinTech or RegTech) tool called BLENDER to monitor market abuse in financial markets, but no official announcement has been made and there is no mention of BLENDER on the FCA’s website. However, it seems likely that the FCA will develop (or is already developing) its own AI SupTech tools to assist it in its supervisory role in the same way as many other sectors are embracing AI.

UK regulators are moving toward a unified, FSMA based framework for cryptoassets that will govern tokenisation, DeFi activities and stablecoins. HM Treasury’s Cryptoassets Regulations 2025 bring a wide range of cryptoasset activities – such as issuance, custody, trading platforms and staking – within the UK regulatory perimeter, treating tokenised products according to their economic function rather than their underlying technology.

The FCA will supervise these activities once the new regime goes live in October 2027, with the authorisation gateway opening in September 2026. DeFi arrangements that replicate regulated activities (e.g., trading, custody, or staking) are expected to fall in scope where a responsible entity can be identified.

For stablecoins, the UK is creating a regulated activity for issuing fiat referenced stablecoins, supervised by the FCA, with custody and exchange services also captured by the broader FSMA regime. The Bank of England is simultaneously designing a prudential regime for systemic stablecoins, focusing on redemption at par, high quality backing assets, and access to central bank facilities.

Compared with MiCA and U.S. state level stablecoin laws, the UK is taking a principles based, function focused approach: overseas firms serving UK customers will still fall in scope, and tokenised or decentralised structures do not avoid regulatory obligations.

UK cryptoasset businesses operating from a UK base must register with the FCA under the Money Laundering Regulations 2017 (MLRs) and meet full AML/CFT obligations. The FATF Travel Rule has applied in the UK since 1 September 2023, requiring VASPs to collect, verify, and transmit originator and beneficiary information for all crypto transfers. If a transfer is sent to a jurisdiction that has not implemented the Travel Rule, the UK sender must still collect and store the required information; when receiving incomplete data from such jurisdictions, firms must apply a risk based assessment and may refuse to release the assets. The FCA expects firms to take “all reasonable steps” to comply, including when using third party providers.

For self hosted wallets, UK VASPs must apply a risk based approach, and in higher risk cases Regulation 64G requires verification of wallet control, typically via cryptographic proof. Because blockchain transactions cannot carry personal data, firms rely on off chain Travel Rule messaging solutions such as Notabene, TRISA, OpenVASP and Shyft to exchange required information.

Under the future UK cryptoassets regime, firms authorised by the FCA will continue to be subject to the MLRs, but AML registration will be consolidated into FCA authorisation. The FATF has noted that even mature regimes still face challenges around interoperability and incomplete data transmission, reflecting ongoing operational complexity for VASPs.

The UK is introducing a two tier prudential framework for stablecoins. For non systemic stablecoins, the FCA’s consultations CP25/14 and CP25/15 propose that issuers must hold backing assets in secure, liquid instruments under a statutory trust with an independent third party custodian, while custodians must segregate client assets, maintain accurate records, and implement strong governance and control measures.

For systemic stablecoins, the Bank of England proposes a significantly more stringent regime. Issuers must hold at least 40% of backing assets as unremunerated deposits at the Bank of England and up to 60% in short term UK government debt, with new issuers initially able to hold up to 95% in gilts to support early stage stability. Additional elements include UK based capital requirements, central bank liquidity arrangements, a UK subsidiary requirement for systemic issuance, and a prohibition on paying interest to coin holders. Final rules are expected in H2 2026.

UK regulators remain highly focused on strengthening data protection, cybersecurity and operational resilience standards for fintechs, with 2025–26 bringing significant legislative and supervisory developments.

The Cyber Security and Resilience Bill, introduced on 12 November 2025, represents the most substantial expansion of the UK’s cyber resilience regime since the original NIS Regulations. It widens the scope of the NIS framework to include managed service providers and data centres, introduces 24 hour incident reporting (including “near miss” reporting), and permits fines of up to £17 million or 4% of global turnover. This aligns with broader government policy to modernise outdated cyber laws and address the heightened threat landscape.

Data privacy reforms are also progressing. The Data (Use and Access) Act 2025, which received Royal Assent in June 2025, introduces targeted updates to UK GDPR frameworks, including a new statutory list of “Recognised Legitimate Interests,” clearer rules on subject access requests, and provisions for addressing AI related copyright and data use concerns.
Operational resilience remains a core FCA supervisory priority. The FCA’s resilience framework (SYSC 15A) continues to evolve and will apply to authorised cryptoasset firms under the new regime. UK regulators are developing additional rules requiring firms to assess incidents against prescribed thresholds, report within defined timelines, and maintain registers of material third party arrangements, particularly in light of the FCA’s designation of Critical Third Parties (CTPs) such as major cloud or AI infrastructure providers.

The Bank of England and PRA will consult on new ICT and cyber risk management standards in Q2 2026, further strengthening group wide resilience expectations. UK regulators are also monitoring interactions with external regimes such as the EU’s DORA, which applies to UK firms with EU operations and is influencing UK thinking on enhanced testing, risk management and third party oversight requirements.

Overall, enforcement and supervisory attention continue to increase, especially around incident reporting quality, third party dependency risks, cloud concentration, and firms’ ability to remain within impact tolerances during disruptions. UK authorities are clearly signalling that cyber resilience, data governance and operational robustness are not optional: they are critical components of maintaining market integrity and consumer trust.

Cryptocurrency and blockchain firms should adopt a multi layered financial crime and operational resilience framework combining real time monitoring, robust governance, and audit ready controls to meet intensifying regulatory expectations.

1. Detect and Prevent Fraudulent Transactions

• Deploy real time KYT (Know Your Transaction) monitoring systems to identify suspicious patterns, including exposure to sanctioned entities, mixers, and high risk privacy coins.
• Automate Travel Rule compliance using specialist providers and secure off chain messaging protocols to ensure global interoperability.
• Screen for sanctions risks aligned with OFSI guidance, including exposure to designated Russian exchanges and DPRK linked actors.
• Strengthen account security controls, including MFA and SIM swap safeguards, to reduce identity based fraud.

2. Build an Audit Ready Compliance Framework

• Maintain comprehensive audit trails of customer identification, transaction data, investigations and SAR filings, with record retention of at least five years.
• Document a defensible AML/CTF and sanctions compliance programme, with clear risk assessments, governance oversight and crypto specific controls.
• Prepare for FCA authorisation under the new UK crypto regime by reviewing consultation papers (CP25/40, CP25/41, CP25/42, CP26/4) and assessing governance, policies, and systems changes required.
• Adopt internationally recognised security standards, such as ISO 27001, and follow NCSC guidance to demonstrate strong cybersecurity controls.

3. Strengthen Governance and Regulatory Engagement

• Ensure senior management are appropriately qualified and SM&CR ready, with clear accountability for financial crime, operational resilience and consumer outcomes.
• Conduct regular control testing and independent reviews, reflecting global supervisory trends emphasising proactive oversight and accountability. [
• Develop a regulatory engagement playbook, including escalation paths, response templates and documented rationale for key compliance decisions.

Together, these steps equip firms to detect illicit activity early, reduce fraud risk, and navigate audits, inquiries and enforcement actions with confidence.

US visa policies are often subject to uncertainty, stricter criteria (a lottery system and mandatory interviewing) and processing times longer than in the UK. In contrast the UK operates a Points Based System, where points are awarded based on criteria. For companies that want to hire quickly, a UK fintech can have an advantage over a US competitor. The flip side can be an employee who aims ultimately to live and work in the US may accept an offer of employment from a UK company, whilst waiting for their US visa to be processed. In relation to digital nomad visas, they generally don’t offer the right to work for local employers and therefore can be more attractive to the individual than the fintech company.

The Russian invasion of Ukraine and resulting strengthening of sanctions against individuals and companies in Russia has increased the regulatory burdens and risks faced by financial services firms. Inconsistencies in interpretation and application of sanctions regulations across different jurisdictions has been particularly challenging for FinTechs (particularly early stage or “bootstrapping” firms) operating cross-border, and where a firm’s head office may be subject to different regulatory obligations than those applying to its branches or subsidiaries (and even customers) in other jurisdictions.

The aggressive use of sanctions (as well as frequent changes in tariffs) as geopolitical pressure by the US has increased uncertainty and risk for FinTechs, including those outside the US (who may have no direct US connection) who may trade in or process transactions in US dollars.

The effects of Brexit (particularly the “no deal” Brexit for financial services) are being felt by UK firms no longer able to benefit from single market “passports” giving access to the EU market and the rest of the EEA. In many cases UK firms now have to comply with up to 30 separate regulatory regimes to carry on business across the entire EEA. Likewise, EEA firms have lost passporting rights to carry on certain regulated activities in the UK. There has also been a gradual (but as yet limited) drift by the UK away from EU financial services directives and regulations (now adopted as “assimilated” law in the UK, and applying as UK national law) but which still remain the foundations of much UK financial services law. Changes in assimilated law (being reformed, revoked or restated in the UK, summarised in the UK Government’s Retained EU law and assimilated law dashboard) introduces challenges, increased costs and uncertainties for UK firms wishing to exploit the economies of scale of the EEA market.

Fintechs looking to set up or expand in UK need to consider hiring needs early, in particular where this requires hiring overseas talent who will be required to be based in the UK. Whilst the visit visa can offer solutions for those who are for example required to attend business meetings or share skills and knowledge, these are only temporary solutions. Where the company requires individuals to work in the UK on a more permanent basis, routes such as the Global Talent visa or the Skilled worker visa need to be considered. The Global Talent visa is based on the individual gaining an endorsement based on their talent. This application can take a while to put together and is a two-stage process which requires an endorsement approval and then a visa application. The advantage to a Fintech whose employee is on a Global Talent visa is that sponsorship is not required and the individual can for example be employed on a freelance basis. For those companies who need to use the Skilled Worker or Global Business Mobility Route planning will be required which may include hiring a UK based employee first, opening a UK bank account and putting on place HR systems. This is also a two-stage process, which requires a sponsor licence before individual visa applications can be applied for. Once a sponsor licence is granted, multiple individuals can be sponsored to work in the UK entity.

It is important for the fintech to seek appropriate legal advice in each jurisdiction it needs to operate from/employ staff from, including what activities may be permissible as a visitor. For the UK in particular planning is vital because visas can take a bit of time to put into place, especially where the company requires a sponsor licence. Companies who have been incorporated for less than 18 months will need to have a UK bank account in place from a FCA and PRA registered bank before a sponsor licence can be applied for.

The most important intellectual property rights for proprietary algorithms and code are confidentiality, copyright and, occasionally, patent rights. The law of confidentiality poses no unusual issues for fintech innovations but gives rise to a tension in the light of regulatory need for transparency and explainability of AI systems. One way to resolve this would be to seek patent protection for aspects of the AI model itself, which, once granted, would enable full disclosure of otherwise confidential information. However, this route is not an easy one. In the UK, and under the European Patent Convention, to be granted a patent, the invention must be new, inventive and capable of industrial application and not specifically excluded from protection as a patent. Mathematical methods are excluded, as are computer programs, which are, of course, at the heart of AI development. This is not to say algorithms cannot form part of a computer-implemented invention where they can be shown to have a ‘technical effect’, they are just not patentable in and of themselves. Where they form part of platforms and applications that solve specific technical problems, then the success of a patent application improves.

Given the difficulties with patent protection and the balance to be struck between confidentiality and transparency, other protections come to the fore. Copyright protection of proprietary source code remains as applicable to AI as it does for more traditional software systems. Furthermore, open source software (OSS) copyright licenses enable flexible tools for development, providing free source code with minimal requirements, often just attribution. This can significantly shorten project development phases. Broadly speaking, licences for OSS fall into two categories: permissive and restrictive. Permissive OSS licences usually only require that distribution of the original OSS be on the same terms as those on which it was provided. Restrictive OSS licences, however, impose restrictions on the terms on which the original OSS and any amendments, improvements and adaptations of the original OSS can be distributed. Licences of this type can cause serious issues where restrictive OSS licences are used alongside proprietary “closed-source” software, as the proprietary software can unintentionally be made subject to the OSS licence (often referred to as having a ‘viral’ effect). Companies should carefully track the OSS and associated licenses used in their products to ensure compliance and identify potential issues early. They should also establish an OSS policy outlining acceptable OSS usage. Some industries, like defence, may reject software incorporating OSS.

AI systems are often inextricably involved with the data they process. The data itself comes with a set of intellectual property protections – mostly confidentiality, sometimes copyright (encountered, for example, through initial collection of data) and, potentially, the sui generis database right[1]. For example, once work has been done formatting training databases, these are potentially protected by copyright in the structure of the database and by the sui generis database right protecting the extraction and reutilisation of the data contained in the database.

In the UK, registered trade mark rights only occur upon registration with the UK IPO. A registered trade mark confers on its owner the right to the exclusive use of the mark in connection with the goods or services for which it is registered. This gives the owner the right to sue for infringement any person who uses an identical or similar mark in the course of trade in connection with identical, similar (or, in the case of famous trade marks, dissimilar) goods or services without consent. The proprietor must also show that the use has caused or is likely to cause confusion, except in cases where the marks are identical and the goods or services are also the same. From a deep fake perspective, registered trade marks can be relied upon to close down synthetic website and fake apps mimicking brands.

Where a brand fails to gain a registrable IP right, this does not mean that the brand is without protection. For example, unregistered trade marks may be protected under the laws of passing off. Trading on customers’ goodwill towards the goods and services marketed under the original brand can divert profits from and may damage the goodwill felt towards the original brand. ‘Goodwill’ is considered to be personal property in the UK and it can pass by voluntary assignment, under a will or intestacy or by operation of the law. To bring a successful action for passing off, the claimant must establish goodwill in its brand, misrepresentation by the other party and damages. In the context of deepfakes, passing off still be off assistance but only where the person’s image is publicly well known.

Whilst the UK currently has no standalone personality rights, the government recognises concerns over an individual’s lack of control over personality in the UK IPO’s consultation “Copyright and Artificial Intelligence (Dec 2024), Section C.5 (“Wider clarification of copyright law”)”, making this an open policy question, potentially to be addressed in future reform. In the meantime, practical mitigations will assist: train staff to recognise deepfakes, implement strong authentication and approval processes and monitor for brand misuse across platforms using a trade mark monitoring service.

Often overlooked or taken on trust by startups when collaborating with third parties is ensuring that the core intellectual property is vested in the company. Below is a summary of the most common IP assets developed and the IP rights that protect them:

IP Asset	IP Type	Rights
Intellectual creations in writing or other permanent medium (e.g. source code)	Copyrights	Exclusive right to prevent copying substantial parts (right occurs automatically, but doesn’t prevent independent creation)
Inventive ideas with industrial application (e.g. software algorithm with ‘technical effect’)	Patents	Exclusive right to prevent manufacturing based on the idea (requires registration, grants a monopoly for a period)
Brands associated with a company’s goods and services	Registered Trademarks	Exclusive right to market goods/services under the brand (requires registration)
Databases created with significant investment	Database Rights	Exclusive right to authorise data extraction and reutilisation (right occurs automatically)
Confidential information and know how	Laws of Confidence	Exclusive right to use/disclose under confidentiality obligations (protection lost without obligations)

Once the IP assets and IP rights that should belong to the company have been identified, the company can take steps to ensure the IP rights actually do belong to it. To show that it owns its IP rights, the company should establish a paper trail that charts and governs the development of the IP asset and any dealings with it. The most common and relevant documents will be the following:

– Founders assignment agreement, where the founder of the company transfers pre-existing and / or newly created IP rights to the company.

– Contracts of employment, which should include provisions regarding the ownership of IP assets and IP rights. (In England and Wales, intellectual property created by an employee in the course of business will usually become the property of the employer, but it is always best to have this set out in a contract.)

– Consulting and partnership agreements, which enable the company to acquire the IP rights in works commissioned from persons providing services to the company on a freelance basis, whether in their own right or through a corporate vehicle.

– Confidentiality agreements, or NDAs. The common law provides that where a recipient would have realised on reasonable grounds the information being disclosed was being given in confidence, then obligations of confidentiality have been imposed. However, it is always better to have this written in a contract.

Applying these basic principles will go a long way to ensuring fintechs retain ownership of their technology.

Prevention is always better than cure. In order to protect trade secrets and confidential information, ensure robust non-disclosure agreements which regulate both the purposes for which a party can use the disclosed information and any onward disclosure. The agreement should also require that recipients of confidential information keep it secure, for example, through encryption and access controls. For copyright protected works, consider source code watermarking, and for brands, consider setting up trade mark watch services.

When a fintech spots someone using its technology, algorithms or brand without permission, the first step is usually to send a cease and desist letter. This letter should clearly state what the IP asset is, the rights the company holds, proof of ownership, and a demand for the infringer to stop within a certain timeframe. Sometimes, instead of demanding they stop, the fintech might offer a retrospective licence, which can legitimise the past use and even bring in some revenue while reinforcing their IP rights. It is vital to get good legal advice before proceeding to avoid the risk of counterclaims, especially with trademarks and patents. For example, in the case of trade marks, companies must avoid making groundless threats of trade mark or patent infringement which can give rise to a counterclaim by the purported infringer.

If the cease and desist letter doesn’t work, the company might try mediation or arbitration. These methods can be less expensive and quicker than going to court and can help both parties reach a satisfactory agreement, otherwise legal action might be necessary. This could lead to an injunction to stop the infringing activities and possibly claim damages.

Regardless which approach is taken, it is important for fintechs to consistently enforce their IP rights. If they let one infringer slide, others might use that as an excuse to do the same. For example, if a company knows its software is being freely downloaded online and doesn’t act, future infringers might argue that the company doesn’t object. Similarly, if a company is lax about protecting its brand, other businesses may claim the brand is not sufficiently distinctive.

While this answer focuses on UK law, enforcement mechanisms differ significantly abroad, for example, the U.S. allows extensive discovery but has no groundless threats regime.

Distributed infrastructure refers to software that is run and stored across multiple jurisdictions, for example, a blockchain, cloud, or other distributed software architectures. For example, if part of a fintech service is stored in France, executed in Ireland, used in Germany with developers in Singapore, it becomes hard to define where the infringement occurs, which jurisdiction’s IP laws govern and where remedies can be enforced.

IP law is territorial and so it is the IP laws of the country in which the protection is claimed that apply. In the case of copyright, the UK extends its protection to foreign works through international treaties such as the Berne Convention, TRIPS , and the WIPO Copyright Treaty. Conversely, UK works in other jurisdictions receive protection according to those states’ implementations of these treaties.

When it comes to trade mark protection, infringement occurs if someone uses your brand in the course of trade in the UK for goods or services that are identical or similar to those covered by your registration. For digital or online services, “use” is not determined by where the business, servers, or code are located. Instead, UK courts focus on whether the allegedly infringing activity is targeted at consumers in the UK, for example, through pricing in Pounds Sterling and / or accepting UK customers.

Since Brexit, UK and EU trade marks are now completely separate regimes. Each must be put to genuine use in its respective territory to remain enforceable. If you need protection across multiple countries, you can strengthen your position and streamline cross border enforcement by using the Madrid Protocol, which allows for international registration of trade marks in multiple jurisdictions through a single application.

As mentioned above, certainly as far as copyright is concerned, enforcement is heavily shaped by territoriality, evidence of copying, and the technical nature of AI models, issues that the UK’s Getty Images v Stability AI (2025) brought sharply into focus. Because courts still struggle to characterise AI models and complex software under traditional copyright concepts, contractual licence terms remain an important protection for commercialising fintech.

Customer licensing agreements should assert ownership of IP and restrict licence grants to output use, rather than accessing or retraining on underlying datasets or model weights. The licence grant can also be limited to deployment on approved infrastructure with no redistribution. To reinforce the licence scope, the contract should include audit rights and require licensees to maintain appropriate usage logs to support audit.

Although the Getty case concerned image generation models, the principles extend directly to fintech software and AI because the judgment addresses when an AI system constitutes an ‘article’ or an ‘infringing copy’, critical when fintechs distribute models not just API services. In Getty, training location was decisive, so for now fintechs using cross border cloud training must document this to avoid exposure. It is however worth noting that a similar case in Germany, GEMA v Open AI took a step back from the technology and used its output to infer probative evidence of the input. This case is also subject to appeal. Given there is no real consensus as yet it is extremely important to maintain evidence of dataset provenance as customers are likely to seek contractual comfort in the form of warranties as to provenance within the licence agreement. Filtering and prompting safeguards, directly applicable to financial AI tools where outputs could inadvertently reproduce protected materials or sensitive information, are also very important to get right to avoid being on the wrong end of an action for breach of confidentiality.

AI and data analytics involve running large numbers of algorithms against vast datasets to find correlations which gives rise to a number of challenges around transparency and fairness, including the opacity of the processing, the tendency to collect ‘all the data’, the repurposing of data (derived data), the difficulties distinguishing between data controllers and data processors, and obtaining access to sufficient (and sufficiently accurate) training data so as to minimise bias.

The UK has no standalone AI law. Rather, to deal with these issues, the UK has established a principles based, non-statutory, cross-sectoral framework for regulating AI as described in its March 2023 white paper policy document M Government, A pro innovation approach to AI regulation . The principles are similar to those of the UK GDPR but tailored to AI, and wider as they are not just limited to personal data:

• Safety, security and robustness. AI systems should function in a safe, secure and robust way throughout the AI lifecycle
• Transparency and explainability. Those deploying the AI must be able to communicate and explain how it is used and its decision making process in appropriate detail
• Fairness. It must be used in a way that complies with the law, and not discriminate against individuals or create unfair commercial outcomes.
• Accountability. There must be appropriate oversight of how AI is used with clear accountability.
• Contestability and redress. There must be clear routes to dispute harmful outcomes.

In comparison to the EU’s AI Act, which is detailed and prescriptive, the UK’s approach is intended to be light touch and innovation friendly, aiming to regulate use not the technology itself.

The UK GDPR gives people the right not to be subject to solely automated decisions, including profiling, which have a legal or similarly significant effect on them. However, this doesn’t apply if the decision is necessary for entering into a contract between the data subject and the data controller, is required by law or is based on the data subject’s explicit consent. In such cases, fintechs are obliged to implement suitable measures to safeguard the data subject’s rights and freedoms, in particular the right to obtain a human in the loop intervention to review the decision. The ICO guidance further stresses the importance of conducting data protection impact assessments and having clear accountability structures in place before any such processing takes place.

The ICO’s AI guidance further suggests the use of explainability statements aligning explanations to the UK AI Framework principles, under which explainability is a key principle. Fintechs deploying AI, whether for automated credit and AML or otherwise, must be able to communicate and explain how it is used and its decision making process in appropriate detail. Explanations must cover both why a model produced a specific output and how governance processes ensure fairness, safety, and accountability.

When relying on automated-decision making, there is also the risk of propagating bias from source materials into potentially discriminatory outputs, creating a liability risk under the Equality Act 2010. Biased outputs also risk breaching UK GDPR duties of fairness and accuracy, as data controllers will be expected to implement controls over data quality and bias risk. The ICO highlights the need to assess potential sources of bias at data collection, modelling, evaluation, and deployment stages, noting that choices about training data and what features to include can significantly affect fairness. Additionally, the UK’s AI Ethics & Governance Framework (2025), which guides responsible AI deployment in the UK’s public sector, further emphasises the importance of embedding fairness and non discrimination throughout the AI lifecycle with board level accountability for fairness oversight.

In order to mitigate bias and unfairness in automated decision making, there should be a process in place for individuals to challenge or appeal a decision, and the grounds on which they can make an appeal. Any review should be carried out by someone who is suitably qualified and authorised to change the decision, taking into consideration the original facts on which the decision was based as well as any additional evidence the individual can provide to support their challenge.

AI systems often sit on layered stacks of technology and data, built on licensed-in products and services from third party providers, whether in terms of the model or the training data. Data may be licensed in from database providers at the collecting and formatting stage, who in turn may have licensed-in underlying databases. Further data may be procured at the training stage, where pre-trained AI models are provided to AI developers who specialise in particular niches and provide further specialised data into the models. When sharing data across complex digital supply chains like these, from an IP and data protection perspective, fintechs should:

– map their supplier ecosystem and maintain a register of the third party AI and data suppliers who have contributed to their model build;

– ensure that they have contracts in place with these third party providers which include clear terms regarding, amongst other things, allocations of ownership regarding data, warranties regarding data provenance and authorisation, liability, indemnity and service descriptions.

– apply an operational resilience lens to these suppliers to guard against IP and data theft, ideally bringing them in line with the risk-based regime in the UK Cyber Security and Resilience Bill which is expected to receive the Royal Assent in 2026. Although the bill is sectoral it deals with systemic risk created by supplier dependencies and is worth aligning with irrespective of whether your business falls within its scope.

The UK government has reaffirmed its belief that existing regulators are best suited to apply rules to AI use. The UK’s AI white paper outlines five cross-sectoral principles for regulators to implement, guiding AI deployment to achieve appropriate outcomes.

The FCA, PRA and Bank of England regulators adopt a technology neutral, outcomes focused approach to regulation and supervision and have confirmed that existing regulatory tools are sufficient for now. While there are no AI-specific sectoral requirements currently, various provisions may apply depending on the firm’s nature and circumstances. These include:

• Organisational and risk management: firms must responsibly organise and control their affairs, including having adequate risk management systems.
• Data requirements: ensuring the accuracy, integrity, and quality of data.
• Operational resilience: requirements on outsourcing and third-party risk management, applicable to firms using third-party data and AI models.
• Good governance: proper procedures, clear accountability, and effective risk management of AI systems.
• Consumer protection: firms must meet high standards when dealing with consumers.

Firms must ensure good customer outcomes and act in their best interests, particularly regarding potential bias and discrimination. Compliance with these high-level requirements will vary based on the firm’s size, nature, scope, and complexity of its activities.

It is worth noting the introduction in 2025 of a new ‘Senior Managers Regime’, which can personalise liability for AI conduct failures. The rule states “You must take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system”. The FCA and PRA have already stated that this rule applies to AI Systems including automated credit or investment decisions.

UK fintechs face a rapidly evolving liability landscape as regulators sharpen their focus on AI governance, operational resilience and consumer outcomes. Over the next 12 months, the most significant risks are likely to arise from Senior Manager liability under SM&CR, where managers must take “reasonable steps” to prevent AI driven misconduct, such as biased decision-making, data breaches or market instability. Poorly governed AI systems may also expose firms to Consumer Duty breaches if outputs cannot be explained or monitored, as well as liability for negligent model governance where firms fail to evidence oversight, validation or understanding of their models. Additionally, the expansion of the Critical Third Party regime means firms remain fully responsible for the behaviour and risks of outsourced AI providers, while algorithmic bias could give rise to Equality Act 2010 discrimination claims. Increased ICO scrutiny under its AI and Biometrics Strategy adds a further layer of data protection risk.

To mitigate these exposures, fintechs should implement a defensible AI risk management framework grounded in clear accountability, transparency and assurance. Core components include board level ownership of AI governance, defined SM&CR responsibility maps, and a formal model risk management framework covering model inventories, risk classification, testing, validation, explainability and drift monitoring. Firms should commission independent audits of model fairness and performance, strengthen vendor due diligence for third party AI systems, and maintain comprehensive documentation and audit trails to defend decision-making under regulatory scrutiny.

Finally, fintechs should ensure they have AI specific incident response plans, covering escalation, regulatory notifications and customer remediation, alongside appropriate professional indemnity and cyber insurance. Firms that can demonstrate structured, proportionate and well documented oversight of AI systems will be far better positioned to satisfy regulators and defend against emerging theories of negligence, discrimination or supervisory failure.

The UK move to regulate cryptoasset activities by introducing new legislation, regulations and categories of regulated activities aims to keep the UK at the forefront of international FinTech innovation. The new requirement for FCA authorisation (which, although a barrier to market entry adds regulatory certainty and market credibility) and the application of FCA regulation to cryptoasset related activities brings those activities into the financial services mainstream.

The Property (Digital Assets etc) Act 2025 became law on 2 December 2025. The new law recognises that digital assets are fundamentally different from physical assets and from rights-based assets (choses in action) like debts and financial securities which have long been recognised by both English and Scottish law. The Act recognises technological changes in the representation of wealth and brings certainty to the legal character of digital property rights and how those property rights are protected by recognising digital property rights as a “third category” of personal property. The English courts were already developing the concepts and recognition of digital asset rights through case law, and the new Act strengthens the UK’s position as the leading jurisdiction for recognising the developing nature of the digital asset economy.

The UK shared concern with EU countries that they could be at risk of the established US based card payment systems (Mastercard, Visa and American Express) being “weaponised” by a US administration for geopolitical purposes has accelerated the existing drive towards “Open Banking”, including real time, account to account (A2A) payments (bypassing card schemes and traditional clearing). Payment services (provided by third party payment services providers) are increasingly embedded into retailers’ commercial platforms to improve transaction times and payment certainty and to reduce transaction costs.

The Bank of England is continuing to explore the case for a “digital pound”, with a “design phase” work plan running through 2026. The Bank sees the digital pound as potentially having an important role in the UK’s emerging multi-money system (different forms of pounds interchangeably at equal value; including public money such as cash and, potentially, a digital pound, and non-public such as commercial bank deposits, stablecoins or tokenised assets). A national digital currency could provide economic and geopolitical resilience, address the increasing risks of loss of national sovereignty by the increasing use of non-sovereign cryptocurrencies, increase liquidity and reduce costs. No decision has yet been made to introduce a digital pound, and any introduction would require legislation through Parliament.

The UK’s population for “Brexit” has decreased (with UK public opinion now about 2 to 1 believing that Brexit was the wrong decision). As of January 2026, there are unconfirmed reports that the UK government plans to introduce legislation allowing a strategy of “dynamic alignment”, whereby UK laws in certain areas would automatically follow EU laws to reduce trade friction. The UK government is eager for a “re-set” with the EU, including in financial services (which has long been an important part of the UK economy).

If the policy is pursued (and reciprocated within the EU) it is possible that this could lead to increased “equivalence” and mutual recognition of regulatory regimes taking the UK and the EU closer to arrangements comparable to passporting. Easier access to the substantial EEA market (giving potentially greater return on investment, and so access to fundraising), could potential accelerate fintech innovation in the UK.

The FCA has also entered into MOUs with other national regulators, particularly regarding exchanging information as to best practices. The FCA and PRA already exchange information with other national regulators in areas of mutual interest (such as firms entering into foreign markets). It is foreseeable that there may be a wider international convergence in regulatory approaches (if not in regulation itself), even as international regulation struggles to keep up with international technological advances.

There are currently no proposals by the UK Government to introduce legislation to regulation AI. The FCA remains supportive of regulated firm’s adoption of artificial intelligence in the UK financial markets where this drives innovation and benefits consumers and markets while balancing the risk. Existing regulatory principles (such as the requirement for an authorised firm to conduct its business with due skill, care and diligence, to pay due regard to the interests of its customers and treat them fairly, and to act to deliver good outcomes for retail customer) are capable of applying to AI innovations. For the foreseeable future it is likely that AI innovations within the financial sector will continue to be regulated under the existing (wider, non-AI specific) rules. However, (as with many sectors) it is likely that AI will have an increasing (and potentially transformative) impact on all areas of the financial services sector.