AI Live Testing: How It Can Support Safe and Responsible AI Deployment
•February 10, 2026
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Companies Mentioned
Why It Matters
AI Live Testing bridges the gap between experimental pilots and market‑ready AI, accelerating responsible innovation while informing regulatory policy for the financial sector.
Key Takeaways
- •Second application window opens January 2026.
- •Targets firms beyond proof‑of‑concept stage.
- •Holistic testing includes model, governance, and controls.
- •Regulator gains real‑world AI risk insights.
- •Accelerates safe AI deployment in financial services.
Pulse Analysis
Regulatory sandboxes have become a cornerstone of fintech innovation, offering a controlled environment where new technologies can be vetted before full market exposure. The FCA’s AI Live Testing programme extends this concept to artificial intelligence, recognizing that AI’s systemic risks demand more than isolated model assessments. By opening a second application round in January 2026, the regulator signals a commitment to scaling responsible AI practices across the UK financial ecosystem, inviting firms to transition from laboratory‑grade proofs to live, customer‑facing deployments.
The programme’s three‑phase structure—Discovery, Framework Validation, and AI System Testing—provides a comprehensive roadmap. Participants receive technical assistance from Advai and regulatory guidance from FCA subject‑matter experts, ensuring that both quantitative performance metrics and qualitative governance factors are scrutinised. This holistic lens evaluates the AI model, deployment context, risk controls, and human‑in‑the‑loop mechanisms, moving beyond the narrow focus on model accuracy. By mandating shared evaluation and iterative feedback, the FCA helps firms identify hidden biases, data‑drift issues, and compliance gaps before scaling.
For the broader industry, AI Live Testing offers a dual benefit: firms gain a clear pathway to market readiness while regulators acquire actionable intelligence on emerging AI behaviours and risk patterns. This feedback loop enables the FCA to refine its AI regulatory framework in real time, fostering a more resilient financial market. As AI becomes integral to credit scoring, fraud detection, and advisory services, such collaborative testing environments are essential for balancing innovation speed with consumer protection and systemic stability.
AI Live Testing: How it can support safe and responsible AI deployment
AI Live Testing now open for applicationsAt the FCA, we’re providing a structured but flexible space where firms can test AI-driven services in real-world conditions, all with our regulatory support and oversight and help from our technical partner, Advai. Collaboration and communication is at the heart of what we are doing.The first cohort joined AI Live Testing in October last year. We opened a second application window on 19 January 2026 and are now inviting applications.Moving on from 'POC paralysis'AI Live Testing is for firms with mature proof of concepts (POCs) who are ready to test in controlled market environments, with a view to imminent market deployment.Through live testing we want to help UK innovators move safely beyond 'POC paralysis', or what is often described as 'perpetual pilots'.What we’re actually testingWe’re often asked if we’re testing foundation models as part of AI Live Testing. We distinguish between the AI system and the AI model. That’s because we think the risks and benefits of an AI use case can only ever be understood in the context of its specific use case, ie at the enterprise level.We broadly define the AI system as: the actual AI model, information on the deployment context and core risks (in the deployment context); governance and human in-the-loop considerations, evaluation techniques as well as the input and output controls. This means AI Live Testing takes a holistic approach to AI design and deployment, at the level of the deploying enterprise, rather than a narrow focus on the model itself.How AI Live Testing works in practiceParticipating firms get AI technical and regulatory support, working with subject matter experts who know about financial services regulation, AI systems testing and validation. Participation includes 3 sequential phases:DiscoveryFramework validationAI system testing (including shared evaluation)We focus on both quantitative and qualitative factors to get a truly holistic understanding of the AI system.What’s in it for usIt’s clearly good business practice to test an AI system against its desired outcome. But, for us as a regulator, it also increases our understanding of the debate around safe and responsible AI. One of our key questions as part of AI Live Testing is how to translate principles into safe and responsible AI outcomes for financial consumers and markets. We can only do this by working with firms to establish a consensus on the way forward.AI Live Testing also allows firms to share with us any challenges they are having interpreting and aligning with the regulatory landscape. This gives us material intelligence into what’s happening on the ground, including key risks. This helps us productively adapt and evolve in response to real industry behaviour, which is vital for any major technology shift.How to apply
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