Banks and model risk
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Australia's Prudential Regulator Says Assurance Practices Are Not Keeping Pace With AI at the Selected Large Entities It Engaged With
In a letter of April 30, 2026 to the entities it regulates, APRA reports what it found among selected large banks, insurers and superannuation trustees, among them a reliance on "point in time and sample based assurance methods" that it calls "ill suited to probabilistic models that learn, adapt and degrade over time."
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Respondents to the Bank of England and FCA's 2026 AI Survey Most Often Relied on Vendor Assurance and Contracts to Understand High-Materiality Third-Party AI
In a report published on October 26, 2026, the Bank of England and the Financial Conduct Authority describe their fourth survey of artificial intelligence in UK financial services, and say third-party implementations made up a larger share of the AI systems firms considered highly material than in 2024.
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Connecticut's Banking Department Says It Plans to Review the AI Systems of the Entities It Regulates During Supervisory Examinations
In guidance dated September 22, 2026, the Connecticut Department of Banking set out its expectations for how the Connecticut-chartered financial institutions and other entities it licenses or regulates should govern the AI systems they use, and said it plans to review those systems and related policies and procedures during supervisory examinations.
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The FSB Describes Effective Human Oversight of AI at Financial Institutions as Meaningful, Not Nominal
On October 15, 2026, the Financial Stability Board published its final report on sound practices for financial institutions' responsible adoption of AI. Effective human oversight, it says, is "meaningful," as opposed to oversight that is nominal or driven by what it calls tick-the-box compliance.
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Not Within the Scope of This Guidance: Generative AI in the US Bank Regulators' Model Risk Guidance of April 2026
On April 17, 2026, three US bank regulators issued revised guidance on model risk management. Generative AI and agentic AI models, a footnote says, "are not within the scope of this guidance."
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Partial Understanding: The Bank of England and FCA's Survey of AI in UK Financial Services, November 2024
In November 2024, the Bank of England and the FCA published the results of their 2024 survey of AI in the UK financial firms they regulate. Many firms said they had only "partial understanding" of the AI they use, largely because of third-party models.
