With today’s increasing use of artificial intelligence (AI) technology in the financial services sector, the future effects and innovative plans have become a huge discussion topic for the Financial Conduct Authority (FCA). As more firms continue to develop in this space, we are quickly seeing a range of benefits such as new job opportunities, and productivity improvements. It is, however, important that we do not overlook the emerging risks that we will face alongside these benefits.
The FCA states that although the use of AI can benefit the market, it can also cause imbalances. We face risk of AI affecting the integrity, transparency and fairness of markets if we do not provide careful oversight of the rapidly developing technology.
In light of the above, the FCA has taken an outcome and principles-based approach to encourage innovation, whilst protecting consumers and market integrity. The article below states “at the FCA, we are determined that, with the right guardrails in place, AI can offer opportunity”. The FCA has put frameworks in place to address some of the issues that have recently come to light, however, will only intervene with new rules or guidance where necessary. It continues to recognise that the regulation of AI needs a globally co-ordinated approach and is taking various steps, including co-founding with an international group of financial regulators and related organisations, the Global Financial Innovation Network[1], to manage the risks and opportunities.
AI is still a moving feast, and we continue to learn more about the FCA’s approach to its regulation weekly. Please see here for the latest:
Our emerging regulatory approach to Big Tech and Artificial Intelligence | FCA
[1] https://www.fca.org.uk/firms/innovation/global-financial-innovation-network