Turning regulatory clarity into a competitive edge: insights from the DRCF’s AI & Digital Hub Report

The Digital Regulation Co-operation Forum (DRCF) brings together the UK’s four key digital regulators – the Financial Conduct Authority (FCA), Competition and Markets Authority (CMA), Information Commissioner’s Office (ICO) and Ofcom – to take a coordinated approach to the challenges of the digital economy. Its objective is to provide clarity for firms navigating overlapping rules across competition, data protection, communications, and financial services. 

One of its early innovations was its AI & Digital Hub (Hub): a year-long pilot of a multi-agency advice service offering free, informal, cross-regulatory advice to innovators – particularly those developing AI or digital technologies with public or societal benefits – whose activities came under at least two DRCF regulators.

Following the end of the pilot, the DRCF published a report on the insights it has learned which will inform the next phase of the DRCF’s work. The report offers useful insight into how regulators are adapting to support innovation in AI and digital technologies. 

In this post, we discuss the key takeaways from the report for companies whose innovations require them to navigate cross-regulatory engagement.

1. The AI & Digital Hub as proof of concept 

During the year long trial, the Hub provided advice to 20 innovators. To broaden its impact, the DRCF published 8 anonymised case studies based on real queries to help other innovators facing similar challenges. Whilst not limited to AI, most queries focused on AI-related issues.

The published case studies cover topics such as:

• managing resilience risks from third-party software defects;
• advertising financial promotions; and
• perimeter guidance and data considerations for AI-enabled compliance tool. 

As the first multi-agency advice service of its kind, the Hub offers valuable insights into both the benefits and challenges of delivering cross-regulatory support for emerging technologies. 

2. Regulatory complexity: turning challenge into advantage

Digital and AI propositions often span multiple regulatory regimes. For innovators, mapping potential “regulatory cover-chains” early – identifying which regulators need to be engaged collectively – can streamline compliance, reduce duplication, and accelerate decision-making. The Hub’s model recognises this and offers a practical blueprint for coordinated engagement.

The report highlights some of the challenges businesses face when seeking cross-regulatory support: some lacked familiarity with relevant regimes to know what questions to ask, while others struggled to frame cross-regulatory queries. The Hub addressed these issues by encouraging early interaction to clarify applications, ensuring companies received the guidance they needed while keeping response times efficient.

A key finding was that cross-regulatory advice helped companies better understand their obligations, reduce downstream risks, and, in some cases, gain a competitive edge. In one instance, engagement through the Hub prompted a company to prioritise the UK as a key market and increase local investment.

This signals a broader shift: regulation is no longer just a compliance cost or roadblock – it can be a strategic advantage for companies that engage proactively.

3. A cultural shift in regulation: from reactive enforcement to proactive enablement

The report highlights that the Hub provided the regulators with an opportunity to work collaboratively, offering direct advice to innovators while experimenting with new ways of working. Each accepted applicant received a response covering all issues the regulators could provide a position on, signalling progress toward the ambition of fully cohesive, cross-regulatory guidance – though this remains a work in progress.

Providing advice across multiple regulatory remits involves both legal and operational complexities, and the report is candid about these challenges. Draft responses required internal sign-off from all regulators, and differing risk appetites sometimes led to extended discussions. Innovators’ expectations did not always align with the Hub’s offer: some sought faster turnaround times, but responses were influenced by evolving policy guidance, scheduling constraints, the need to refine questions collaboratively, and differing sign-off procedures. Over time, the regulators gained experience, increasingly sharing early drafts of advice to identify issues sooner and streamline the process. The pilot demonstrated that, with appropriate operational design and governance, coordinated cross-regulatory support is achievable.

More broadly, the Hub represents a tantalising glimpse on a potential shift in approach within UK regulation. Regulators are increasingly engaging proactively rather than responding solely through enforcement, coordinating earlier to support companies in navigating emerging risks. This reflects an evolution in regulatory practice, particularly in relation to complex and fast-moving technologies.

4. Towards a hybrid model: enhancing the Hub with regulatory sprints

An independent evaluation by the Centre for Strategy & Evaluation Services concluded that the Hub could deliver the most value as a hybrid model – an enhanced version of the Hub as piloted supplemented by additional service lines such as regulatory sprints. 

Building on this feedback, the next phase of the DRCF’s work will focus on expanding the Hub’s reach and impact through more thematic engagement and advice. The hybrid model will continue to offer informal guidance while placing greater emphasis on active engagement via initiatives such as webinars and regulatory sprints.

It is hoped that this approach better reflects how innovators work in practice. Firms iterate rapidly, prototype, test, and adapt, meaning static regulatory processes are often ill-suited to agile development. Sprint models, such as the FCA’s 2017 TechSprints, the FCA’s AI Live Testing, or the ICO’s Sandbox, enable structured collaboration and real-time scenario testing, allowing regulators and innovators to explore “what if” questions together and better align regulatory engagement with innovation cycles.

5. The next phase is thematic and focused on agentic AI 

Taking on board the lessons learned, the DRCF has launched a Thematic Innovation Hub, initially focusing on “agentic AI” – AI systems capable of autonomous decision-making and initiating actions without direct human prompts. Alongside this, the DRCF has issued a public call for views on regulatory challenges in this area. The Thematic Innovation Hub aims to extend the DRCF’s reach through targeted engagement and regulatory advice on priority topics.

This is reflective of where regulatory attention is shifting. While previous discussions have focused on dataset bias, transparency, and foundation models, agentic AI is emerging as the next frontier. For the financial services sector, this means firms developing or deploying autonomous decision-making systems can expect closer regulatory scrutiny. The call for views provides an opportunity for firms to contribute to shaping how regulation in this space evolves.

6. Next steps

The AI & Digital Hub pilot demonstrated both the potential and the challenges of delivering cross-regulatory support for emerging technologies. For innovators, it highlighted the value of early engagement, mapping regulatory cover-chains, and leveraging coordinated guidance to manage risks and unlock strategic advantages. For regulators, the pilot has provided practical experience in collaborative working, iterative advice, and the governance needed to provide coherent multi-agency responses.

Looking ahead, the DRCF’s hybrid model and Thematic Innovation Hub signal a more structured and targeted approach to supporting innovation. The focus on agentic AI underscores the regulators’ forward-looking priorities, offering firms an opportunity to influence emerging guidance while preparing for heightened scrutiny in autonomous systems.

Companies operating in AI, fintech, and other regulated digital sectors can benefit from proactive engagement with cross-regulatory initiative: contributing to consultations and working iteratively with regulators can help navigate complex obligations, reduce downstream risks, and turn regulatory clarity into a competitive edge.