Artificial intelligence | UK Regulatory Outlook July 2026

UK updates

Digital Regulation Cooperation Forum shares insights into regulators' use of generative AI 

The Digital Regulation Cooperation Forum (DRCF), comprising the Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA), Ofcom and the Information Commissioner's Office, has published insights into how its member regulators are adopting generative AI in their regulatory activities, including in supervision and enforcement. 

For example, the CMA is developing agentic AI that is able to "experience" and capture consumer journeys at scale, identifying potential infringements of consumer law such as drip pricing (when additional charges are revealed during the transaction process). As a result of this investment, the CMA has opened investigations into eight businesses and sent advisory letters to one hundred others. 

The FCA has been pilot testing the capability of large language models (LLMs) to identify "sludge" practices (that is, excessive frictions that take advantage of consumers' behavioural biases and hinder them from making decisions in their interests). The pilot found that LLMs can simulate consumer personas and perform multiple audits at speed, offering scalability and potential efficiency gains. However, it also identified that LLM interpretation of webpage content is imperfect and that human review remains essential. 

Overall, the DRCF states that its members' use of generative AI is shifting from experimentation to becoming a core component of regulatory oversight.  

Regulators seek input on digital verification and synthetic media challenges 

The DRCF has published a call for input on the opportunities and challenges associated with digital verification and synthetic media/deepfakes, both of which it considers to "have a bearing on authentication and trust". 

On digital verification, in light of AI agents beginning to make autonomous decisions on behalf of users, such as approving transactions, the DRCF highlights the need to verify that agents are authorised to execute actions. The call for input addresses, among other things, key considerations for the use of digital verification in the context of agentic AI. 

On synthetic media (video, image, text or voice that has been generated in whole or in part by AI algorithms), the DRCF is seeking views on a range of issues, including: 

• the effectiveness of provenance and authenticity tools; 
• transparency and labelling approaches; 
• technical standards; 
• accountability across the supply chain; 
• platform detection and moderation practices; 
• enforcement challenges in implementing safeguards or preventing misuse; 
• regulatory barriers; and  
• where organisations experience overlap between the Online Safety Act 2023, the UK GDPR, IP and consumer protection rules.  

The DRCF notes that, among other risks, synthetic media can be used to circumvent authentication systems, spread disinformation, mislead consumers and infringe copyright. 

The call for input closes on 14 August 2026. 

New regulations limit use of automated vehicle terminology in marketing 

See advertising and marketing section.  

Government launches call for evidence on data regulation and AI 

See data law section. 

Government announces measures to protect children using AI chatbots 

See digital regulation section.  

Government seeks views on regulation of AI-enabled toys 

See products section.  

EU updates 

Digital Omnibus on AI is finalised, triggering revised compliance deadlines 

On 29 June 2026, the Council of the EU adopted the Digital Omnibus on AI, which introduces targeted amendments to the EU AI Act. This follows the European Parliament's adoption of the regulation on 16 June. The regulation was published in the Official Journal of the EU on 24 July 2026. It entered into force three days later on 27 July, ahead of the next EU AI Act deadline of 2 August.

Following its entry into force, a revised implementation timetable applies to affected businesses, such as new deadlines for compliance with obligations for providers and deployers of high-risk AI systems. The most imminent deadline is 2 August 2026, from when, among other things, deployers of AI systems will be required to label deepfakes and AI-generated text (see below). See this Insight for more information.

European Commission publishes final guidelines on transparency obligations for providers and deployers of certain AI systems 

The European Commission has published guidelines on the transparency of AI-generated content to help providers and deployers of AI systems ensure compliance with the transparency obligations under Article 50 of the EU AI Act. The guidelines complement a previously published code of practice on the transparency of AI-generated content (see this Regulatory Outlook for more information). 

Under Article 50 of the AI Act, providers must ensure that AI systems are designed to inform users when they are directly interacting with AI. Article 50(2) obliges providers of AI systems, including general-purpose AI systems, to ensure that the outputs of the AI system are marked in a machine-readable format and are detectable as artificially generated or manipulated. This obligation does not apply where the AI performs an assistive function for standard editing, or does not substantially alter the input data. Deployers of AI systems must inform individuals when they are exposed to deepfakes, AI-generated or manipulated text on matters of public interest without human review or editorial control, and emotion recognition or biometric categorisation systems. 

These obligations are scheduled to take effect on 2 August 2026. The Digital Omnibus on AI introduced a transitional period for the watermarking obligations for providers under Article 50(2), in respect of systems placed on the market or put into service before 2 August 2026: those obligations will come into effect on 2 December 2026. 

The Commission states that the guidelines explain certain concepts and exemptions, and provide examples, including what constitutes directly interactive AI systems, synthetic content, deepfakes and AI-generated text on matters of public interest, as well as examples of exceptions such as standard editing. 

European Commission launches initiative to bring autonomous driving to EU cities 

The Commission has launched the Autonomous Drive Ambition Cities (ADACities) initiative under its Apply AI Strategy to support the deployment of autonomous driving in EU cities. 

ADACities aims to allow selected EU cities to "become real-world leaders in the deployment of autonomous mobility innovation, including robo-taxis and car-sharing, autonomous shuttles supporting multimodal urban mobility and advanced self-driving cars". An accompanying call for expression of interest has been launched to identify city-led autonomous driving partnerships interested in participating, and to gather information on their deployment ambitions, maturity and investment needs. The call closes on 30 September 2026.