Artificial intelligence (AI) and machine learning (ML) are rapidly developing technologies that have the potential to transform financial services. The promise of this technology is to make financial services and markets more efficient, accessible, and tailored to consumer needs. This may bring important benefits to consumers, financial services firms, financial markets, and the wider economy.
However, AI can pose novel challenges, as well as create new regulatory risks, or amplify existing ones. The Bank of England (BoE), the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) therefore have a close interest in the safe and responsible adoption of AI in UK financial services, including considering how policy and regulation can best support this.
The supervisory authorities are publishing a discussion paper to further our understanding and to deepen dialogue on how AI may affect our respective objectives. This is part of the supervisory authorities’ wider programme of work related to AI, including the AI Public Private Forum, the final report of which was published in February 2022.
The discussion papers queries:
The questions fall under three main categories:
- Supervisory authorities’ objectives and remits: exploring the best approach to defining and/or scoping the characteristics of AI for the purposes of legal requirements and guidance.
- Benefits and risks of AI: identifying the areas of benefits, risks, and harms in relation to which the supervisory authorities should prioritise action.
- Regulation: exploring whether the current set of legal requirements and guidance is sufficient to address the risks and harms associated with AI and how additional intervention may support the safe and responsible adoption of AI in UK financial services. This includes understanding which areas of the current regulatory framework: (i) would benefit from further clarification with respect to AI, (ii) could be extended to better encompass AI, and (iii) could act as a regulatory barrier to the safe and responsible adoption of AI in UK financial services.