Why the Chancellor’s Financial Services Skills Compact is an Urgent Compliance Intervention for AI Readiness

The Chancellor’s announcement of the Financial Services Skills Compact comes not a moment too soon.

The new voluntary pledge is designed to address the urgent need for organisations in the banking and financial services sector to build capabilities in artificial intelligence (AI) and other key technologies. Signatories will commit to upskilling 100% of their workforce in up to five critical skills – including AI – over a rolling three-year period, while appointing a senior executive to ensure these goals are met and publicly reported.

The scheme arrives at a time when AI adoption across the sector is rapidly outpacing the ability of firms to deliver adequate training. Employees are embracing generative AI tools for routine tasks like writing reports and analysing data, often without formal training or oversight from their employers

We view the new compact as validation of what our research and experience has consistently shown: that financial firms need to drastically improve their training efforts to keep up with the pace of AI adoption and develop the digital capabilities to keep them globally competitive.

Passive, basic or sporadic compliance sessions are no longer enough. The sector needs to take a proactive and transparent approach to training that focuses on cultivating sustained awareness. A government-backed scheme to oversee this effort is a step in the right direction, but the true measure of its success will lie in whether firms can turn a basic pledge into lasting change.

Key takeaways

• The rapid adoption of AI in financial services has led to a significant training shortfall, with Skillcast research revealing that while nearly three-quarters of sector professionals use AI daily, only 35% have received formal training or guidance in the past year.
• The Financial Services Skills Compact – a new voluntary scheme requiring signatories to retrain and upskill their staff – could help resolve this shortfall, provided firms do not just use it as a means to capitalise on the benefits of AI.
• Signatory firms need to ensure their training helps staff to make safe, compliant decisions when using automated tools, rather than simply making their workforce more productive.
• To address their lack of AI readiness, financial firms should focus on delivering targeted, flexible and interactive training that teaches staff how to recognise inaccurate outputs and protect sensitive data.

What is the Financial Services Skills compact?

The Financial Services Skills Compact is a government-backed initiative co-owned by HM Treasury and the Financial Services Skills Commission (FSSC). The scheme requires participating firms to retrain and upskill their workforces to keep pace with technological developments – particularly the adoption of generative AI – and aims to deliver a more competitive, innovative and resilient financial sector.

Importantly, the compact measures upskilling by the number of unique learners engaged in training, rather than tracking logged hours or completed courses. This focus on meaningful impact prevents firms from inflating their completion metrics or using basic or ineffective sessions to mask a lack of capability.

The four commitments

To meet the requirements of the compact, signatory firms must fulfill four commitments:

1. Commitment A (Upskilling the workforce)

Firms must upskill their employees in up to five critical disciplines (one of which must be AI) over a rolling three-year period using courses, qualifications, certificates or digital learning modules completed during normal working hours. Standard mandatory training, such as basic inductions or health and safety courses, is excluded.

2. Commitment B (Structured pathways for new talent)

Signatories must maintain or expand structure pathways to bring new talent into the industry. These programmes include graduate schemes, apprenticeships and targeted initiatives for career returners or ex-military personnel. Internal staff moves do not qualify towards these targets.

3. Commitment C (Leadership accountability)

Firms must appoint a specific senior executive to take responsibility for closing internal skills gaps. This executive’s details must be shared confidentially with HM Treasury and the FSSC. Firms must also assign a dedicated reporting contact to manage annual submissions of data.

4. Commitment D (Public transparency)

Signatories must publish their progress against their targets on their company webpage every year. They must also explain their data-gathering methodology to the FSSC, who publishes a public, non-anonymised annual report detailing how participating firms are progressing.

What skills are included in the Financial Services Skills Compact?

Participating firms can choose up to five skills to track, but at least one of these must be artificial intelligence.

Firms have a couple of options for choosing their other four skills. They can either choose them directly from the FSSC’s Future Skills Framework, or they can identify their own (as long as they are determined to be “critical” skills). Firms that choose their own skills are encouraged to consult the Skills England Standard Skills Classification.

13 skills are listed in the FSSC’s Future Skills Framework

• Machine learning / AI: Using machine-based systems to generate outputs like predictions, content or recommendations.
• Digital literacy: Using digital tools to find, create and communicate information.
• Data analytics: Analysing and reporting on data ethically to make informed decisions.
• Cybersecurity: Assessing, preventing, and protecting systems from unauthorised access or threats.
• Software development: Understanding, designing, building, testing, and supporting software.
• User experience: Designing systems around human needs to make applications easier to use.
• Agile finance: Managing change iteratively using a "test and learn" approach to meet customer needs.
• Creative thinking: Using innovative practices and new perspectives to solve problems.
• Coaching: Supporting others to unlock their potential through trusted relationships.
• Empathy: Using emotional intelligence to understand others and react positively to different situations.
• Adaptability: Adjusting quickly to changing circumstances and ambiguity.
• Relationship management: Building trusted partnerships with customers through clear communication.
• Teamwork: Bringing diverse groups together in a safe, inclusive environment to deliver common objectives.

Why the Financial Services Skills Compact is vital for a sector lacking strict AI governance

Financial organisations are grappling with the dual promise and threat of AI. While automated tools offer to simplify routine tasks and make staff more productive, initial fears about job security and skills gaps are quickly becoming a reality.

Morgan Stanley’s prediction that AI could threaten more than 200,000 European banking roles by 2030 – representing roughly 10% of the continent's financial workforce – appears to be materialising.

In the last 12 months alone, Standard Chartered and ABN Amro have announced a raft of AI-related job cuts, and HSBC are also considering up to 20,000 redundancies. If these sobering statistics are anything to go by, firms are rushing to integrate AI wherever they can without necessarily considering the consequences. This neglect extends to those who remain at the firm just as much as those who lose their jobs.

A combination of rapid technological change and incomplete training has therefore left the financial sector highly vulnerable. Firms are adopting AI tools much faster than they can teach their staff to use them, which exposes them to critical compliance risks. Confidential client information shared with public AI models remains stored on external servers, and could be exposed in a future data breach. Employees who rely on inaccurate or hallucinated outputs also risk inadvertently making poor, misinformed or non-compliant choices.

The new Financial Services Skills Compact could be vital in addressing these issues, but only if firms acknowledge that AI needs the same strict governance and safety controls as any other powerful corporate tool. Signatories must take the agreement seriously and treat it not only as a means to adapt and grow, but as an extra layer of oversight to protect them from compliance issues and regulatory penalties.

"Our recent survey research suggests AI has already become a daily tool for many people working in financial services, yet formal guidance and training haven't kept pace. That's a risk, and not because employees are unwilling to use AI, but because they're increasingly making decisions with tools they haven't been properly trained to use. Every employee needs to understand where the risks lie in using these tools, when human oversight and intervention is essential, and how to challenge AI-generated outputs."

How to address the AI training shortfall in financial services

So how can organisations capitalise on the benefits of AI while integrating it safely and responsibly?

As HSBC CEO Georges Elhedery recently noted, successfully integrating new technology is impossible if your workforce is "anxious, overwhelmed, and resisting the change." Rather than simply using AI to replace what Standard Chartered’s boss controversially termed "lower-value human capital," forward-thinking firms are realising that targeted, structured and detailed training is the answer.

Focus on practical risks
While it’s important for staff to understand how AI tools can make their lives easier, they must also learn to identify the hazards involved. Interactive case studies and live simulations that actively demonstrate how to use AI responsibly are much more effective than simply sharing a policy document.

"AI training mustn't be limited to software demonstrations or prompt-writing. Employees need practical, scenario-based learning that helps them recognise bias, protect sensitive data, comply with regulations and make defensible decisions when AI is used in the real-world."

Deliver regular sessions
Consistent training builds lasting habits far more effectively than annual refreshers. Delivering exercises in brief, highly focused formats also helps employees stay compliant without disrupting their work.

“One-off, yearly or one-size-fits-all compliance sessions just don’t work anymore. They’re passive, quickly forgotten and often too generic for employees to apply to their everyday work. Shorter sessions delivered more frequently are far more effective.”

“If employees are not regularly practising how to use AI tools responsibly, their reactions in real situations are more likely to be slower, less confident or simply incorrect. Continuous exposure is the best way to build that in-the-moment awareness.”

Adapt and personalise your training
To ensure AI training sessions are as effective as possible, companies must match the learning material to the specific legal risks that different departments face.

"Risks vary depending on someone’s role, so personalised training is valuable. A line manager will face different challenges to someone working in administration or customer service, so sessions need to feel relevant to the individual and their capabilities."

Update training content regularly
Software capabilities shift constantly, so training material must change at the same pace. Rigid training cannot protect a business against a fast-evolving technological threat.

“The tools your staff use today may not look the same in six months. To remain compliant, firms must treat AI training as an ongoing process of adaptation, updating their educational programmes as quickly as the developers roll out new features.”

Frequently asked questions

What is the Financial Services Skills Compact?

The Financial Services Skills Compact is a voluntary initiative backed by HM Treasury and the Financial Services Skills Commission. The scheme asks participating financial firms to upskill their UK workforces in crucial technological fields, including artificial intelligence.

How does the Financial Services Skills Commission track and report a firm's progress?

The Financial Services Skills Commission tracks progress by counting the individual employees who successfully finish their training, rather than logging total study hours. Participating firms must publish these results on their own websites every year. The Commission also compiles this data into a public report that lists the progress of each signatory by name.

Why does AI training matter in financial services?

Using AI tools irresponsibility exposes firms to regulatory and operational risks. When staff input confidential internal or client information into public AI models, they risk breaching data protection laws if that data is leaked. Employees who do not verify automated outputs can also make mistakes that may result in regulatory fines or damage their firm’s reputation.

What does effective AI training focus on?

Effective AI training focuses on the practical risks involved with using automated tools. It should teach staff how to recognise automated bias, protect client confidentiality, spot inaccurate or fabricated outputs and intervene to challenge AI-generated information.

How can firms tell if their AI training is effective?

Successful training must be interactive, role-specific and regularly updated to keep pace with changing software features. It should rely on practical, scenario-based learning and real-life simulations rather than static slide presentations or policy documents that staff are likely to forget.

Want to learn more about AI readiness?

Our in-depth compliance libraries contain e-learning content designed to help organisations integrate and deploy AI tools safely and compliantly, including courses on Responsible Use of AI and Using AI at Work.