Financial Regulators' Proposed Policymaking Approach to AI/ML | techUK Response

15 Feb 2023 08:06 PM

techUK sets out its response to Financial Regulators' (FCA/PRA) proposed regulatory regime covering Automated Intelligence (AI) Machine Learnings (ML) application and development within the financial services sector

Responding to the Artificial Intelligence Public-Private Forum’s (AIPPF) final report, covering the sharing of information on key challenges, potential principles/guidelines, and future industry input within policymaking – The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) published a joint Discussion Paper (DP5/22) on AI/ML within financial services and potential regulatory implementations and considerations within the technology's usage within varying business processes. 

See the joint-regulator Discussion Paper here.

Through extensive consultation with members, techUK's response can summarised via; 

• Any future regulatory approach to AI and/or Machine Learning (ML) within the financial services sector must be pro-innovation, risk-based and outcomes-focused.
   
• Regulators should look to acknowledge and strengthen existing regulation where necessary. Any potential new regulation or governance mechanisms must not replicate or contradict existing regulation. When considering whether new regulation is needed, lawmakers should focus on whether the use of AI/ML adds new risks beyond those risks already present when AI/ML is not in use. Where existing laws are insufficient to address AI/ML risks or otherwise create uncertainty about the application of AI/ML, lawmakers should generally amend existing applicable requirements rather than creating a separate framework for AI/ML.
   
• Following the FCA’s Consultation Paper covering its plans to close the financial advice gap, AI can be used to provide low-cost tailored advice, helping to widen access to consumers.

Read the full response below.

Read here