Duncan ScottJessica Rusu, FCA Chief Data, Information and Intelligence Officer, has spoken at the City and Financial Global AI Regulation Summit on the risks and opportunities presented by artificial intelligence (“AI“) in financial services.
In the speech, Ms Rusu states that the financial services industry is at a critical juncture in relation to its nascent use of AI products and that now is the time to act in order to shape developments to ensure that AI has a positive impact. She then went on too identify four key areas where FCA has responsibility to exert influence to steer AI’s development and adoption:
- The heavy reliance by AI deployments on cloud service providers and the extent to which this creates ‘critical third party’ (“CTP“) risk. She issued a reminder that FCA is alive to this issue and is currently review responses to its CTP discussion paper.
- She also emphasised that firms need to ensure that their adoption of AI solutions is in keeping with existing regulation, in particular, the senior managers and certification regime, consumer duty and operational resilience rules.
- The increasing risks posed to consumers and businesses by audio deepfakes, vishing scams, cyber attacks and biometric theft driven by AI.
- The ongoing considerations around the ethical use of data.
Ms Rusu’s overall view is that FCA is alive to the issues arising out of the adoption of AI solutions in the financial services industry and is confident that the existing regulatory framework provides it with the tools necessary to oversee that adoption. The use by FCA’s Advanced Analytics of web-scraping and social media monitoring tools developed using AI and machine learning to detect, review and triage potential scam websites is given as an example of how AI can support effective regulation.
The speech will shortly be followed by an FCA feedback statement arising out of its AI discussion paper.