AI could trigger a PPI level scandal in ‘two weeks’
A multi-billion pound scandal like PPI could happen within just “two weeks” as UK finance firms plough ahead with deploying AI despite uncertainty around governance standards, a fresh report has claimed.
The UK’s financial services sector faces a “capability gap” when deploying AI, according to a report from regulatory compliance firm Zango.
The research pulled the views from interviews with 27 c-suite senior leaders from the likes of Lloyds, Santander, Monzo and Revolut as well as four industry roundtables with 60 additional senior practitioners.
Leaders warned a lack of operation guidance had left the UK with a significant gap when compared to the US, which published its practical Financial Services AI Risk Management Framework in February 2026.
The report said a “mismatch” where AI produces unintended outcomes that traditional compliance monitoring is not trained to flag could “compound significantly before anything visibly goes wrong”.
It cited multiple leaders as referencing the £38bn PPI scandal – where banks sold unsuitable insurance policies to millions of customers for over two decades – as a “mis-selling problem that built up over years”.
“AI significantly compresses that timeline,” the report said.
One unnamed compliance boss at a “major UK wealth manager” is quoted as warning PPI “could happen in two weeks with AI”.
Anthropic rattles financial ecosystem with latest AI debut
The warnings echo concerns from the Treasury Select Committee that institutions were “not doing enough to manage the risks presented by AI”.
The Financial Conduct Authority has previously said the current regime gave the watchdog “enough regulatory bite that we don’t need to write new rules for AI”.
It comes as industry fears remain elevated over the power of new AI tools. British banks are expected to be given access to Anthropic’s Mythos tool in the near future.
Anthropic has thus far limited the release after deeming it too dangerous for the public. A small handful of US businesses, including Apple and Microsoft, have managed to get their hands on the new model.
The AI giant has said the tool holds an unprecedented risk because of its ability to expose flaws in IT systems.
It triggered a wave of behind closed doors meetings with top finance firms and regulatory officials.
Scott Bessent, the US Treasury Secretary, and Federal Reserve chair Jerome Powell summoned top Wall Street bosses to an urgent meeting over fears that the new tool could turbocharge a new wave of cyber attacks.
Ritesh Singhania, chief executive of Zango, said: “Compliance teams are trying to keep pace with AI systems their own colleagues have deployed, and with criminal networks scaling faster than anyone’s defences.
“Weak governance doesn’t just create individual risk – it creates systemic vulnerability across the entire sector. What’s missing is a shared implementation standard that gives firms a consistent basis for governing AI as they adopt it.”
Barclays, Lloyds and UBS were among the second cohort of names picked last week to join the FCA’s next AI Live Testing, which aims to give firms a safe space for financial firms to test the use of AI in a controlled environment, without tripping over regulatory wires.