To minimize risks and unintended consequences, consumers, firms and regulators need a solid understanding of artificial intelligence (AI) technology. That is why the Bank of England (BoE) and the Financial Conduct Authority (FCA) established the AI Public-Private Forum (AIPPF) in October 2020 to further the dialogue between the public sector, the private sector, and academia on AI.
The aim of the AIPPF was to share information, deepen our collective understanding of the technology and explore how we can support the safe adoption of AI in financial services. The issues and topics covered by the AIPPF fell into three areas: Data, Model risk, and Governance.
Our previous work has shown that the drivers of AI risk in financial services can occur at each level within interconnected AI systems: starting with the risks associated with use of data to train and run AI models; building into risks arising from the use of AI models themselves; which in turn feed into risks to the firm and the governance structures it needs to manage those risks; and finally, the risks to the financial system as a whole. This report represents the culmination of more than a year’s worth of meetings, workshops, and discussions.
One of the key questions is how existing regulation and legislation, such as the Senior Managers and Certification Regime, may be applied to AI and whether AI can be managed through extensions of the existing regulatory framework, or whether a new approach is needed. To help address this question and support further discussion about what an appropriate role for regulators might look like, we will publish a Discussion Paper on AI later this year. It will build on the work of the AIPPF and broaden our engagement to a wider set of stakeholders.
The Discussion Paper will aim to provide clarity around the current regulatory framework and how it applies to AI, ask questions about how policy can best support further safe AI adoption, and give stakeholders an opportunity to share their views. The responses to the Discussion Paper will help the FCA and BoE to identify what is most relevant to remits and what is not, as well as help formulate any potential policy.