This Week in Brief

This week the story is the regulator’s view of AI rather than new products. The FCA has warned that advanced AI is a double-edged sword for cyber security, and two senior FCA officials used a public webinar to flag the risk of deepfake “advisers” while stressing they still want to encourage innovation. For IFAs, the practical message is to look at how well protected your own firm and your clients are, alongside any AI tools you plan to adopt.

Key Developments

FCA Warns That Advanced AI Is Stress-Testing Firms’ Cyber Defences

The FCA has published its review of how firms are using the most advanced AI models in cyber security. Its message is two-sided: the technology can help firms spot weaknesses in their systems far faster than before, but in the wrong hands it can also make cyber attacks more effective. The regulator’s concern is that many firms’ existing defences and response processes simply may not keep pace. Although the review is aimed at the wider industry, the sensible takeaway for a small advice firm is to check your cyber protections, your supplier arrangements and your incident-response plan. (Compliance Week, 3 October 2026)

The FCA Highlights Deepfake “Advisers” as a Real Risk

Speaking at an industry webinar on 30 September, the FCA’s executive director for markets, Simon Walls, gave a pointed example: a fake video of a portfolio manager online recommending an investment that could be unsuitable or even criminal. He said both regulators and firms need better tools to defend against this kind of impersonation, and described unregulated social media advertising as a “major pollutant”. For IFAs, it is a good prompt to tell clients how you will (and won’t) contact them, and to remind them of the FCA’s Firm Checker. (FT Adviser, 1 October 2026)

Regulator Says It Wants to Be “Tech-Positive”, Not Tech-Restrictive

In the same webinar, the FCA’s chief data, information and innovation officer, Jessica Rusu, said the regulator wants to be proportionate and “tech-positive”, and highlighted its own use of AI to remove criminal activity from the market faster. This fits the FCA’s earlier position of relying on existing rules, such as Consumer Duty, rather than writing new AI-specific ones — so the responsibility for using AI sensibly sits firmly with firms. (FT Adviser, 1 October 2026)

From the Trade Press

  • FCA on being a “proportionate regulator” which is “tech positive” — Senior FCA officials on balancing the growth agenda with consumer protection as AI develops at speed, including the deepfake and scam concerns above. FT Adviser, 1 October 2026

  • Adviser work-life balance worsens as hours increase — Professional Adviser reports that almost a third of advisers now work more than 40 hours a week, which underlines why many firms are turning to AI for admin and note-taking. Professional Adviser, 2 October 2026

What to Watch

The FCA has said it will publish a good-and-poor-practice report from its AI Live Testing programme later this year, which should give advice firms their clearest guide yet on what the regulator expects from AI tools. Keep an eye out for it, as well as any follow-up to this week’s cyber warning.

Sources: FT Adviser, Professional Adviser, web search. Compiled 5 October 2026. Professional Adviser was checked via its public pages rather than a logged-in browse.