AI in action · Regulation
FCA: AI Can Help IPO Sponsors but Not Replace Them
The FCA's review of how listing sponsors use AI, published November 4, found no fully automated processes and said AI "cannot replace a sponsor's professional judgement".
When a company lists in London or makes a large transaction, a sponsor, usually an investment bank or advisory firm approved by the Financial Conduct Authority, has to confirm to the regulator that the company has met its obligations. On November 4 the FCA published, in Primary Market Bulletin 67, the results of a review of how a small sample of sponsors use AI in that work. It asked whether AI had been used on recently completed sponsor transactions and then met the firms, some of which demonstrated their tools.
Adoption varied widely. Every sponsor had access to enterprise AI tools approved by the firm, and some had built their own, for example to find regulatory material or run quality checks. One used AI only for administrative support such as drafting; others used it for background research, summarising documents, first drafts and due diligence; one used a specialist financial-services AI platform across several workstreams. None used AI for fully automated processes, and none required staff to use it.
The firms were candid about limits. Sponsors cited the risk of hallucinations and gave an example of a peer comparator that an AI tool had left out. Those using AI beyond administration said staff reviewed outputs before relying on them, and some said complex negotiations, strategic advice to boards and final legal or ethical accountability were unsuitable for AI support. Controls included limiting staff to approved tools, blocking consumer AI apps and requiring human review; some firms were considering AI-specific terms in engagement letters, and one flagged the risk from AI use by third-party advisers.
The FCA's conclusion is short: "AI may support sponsor work, but cannot replace a sponsor's professional judgement, independent challenge or accountability." It noted that AI could make sponsor services cheaper, but said that does not change the duty to reach conclusions after due and careful enquiry. Sponsors could explain case by case whether prompts and outputs counted as records, an issue that matters if a transaction is later challenged.
The bulletin fits the FCA's wider stance. The regulator has said it does not plan an AI-specific rulebook and will apply existing principles, and its late-October paper on good practice and areas for improvement made senior managers accountable for AI outcomes without requiring them to be specialists. For investors in new listings, the practical point is that the checks behind a prospectus are increasingly drafted with AI, and the regulator expects a named human to stand behind every one of them.
Sources: Financial Conduct Authority — Primary Market Bulletin 67 (Nov 4, 2026); FinTech Global — FCA puts asset managers' AI governance under the spotlight (Oct 28, 2026)