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An outline of the AI Public-Private Forum’s findings, in particular, the best practice firms can adopt in relation to its AI policies and procedures.
3 minute read
6 June 2022
Artificial intelligence (“AI”) has become increasingly crucial for UK firms due to the digital transformation of financial service providers in recent years. Our previous article examined the divergence between the UK and EU in AI regulation. In doing so, we considered the Bank of England (“BoE”) and the Financial Conduct Authority’s (“FCA”) joint AI Public-Private Forum (“AIPPF”) which was created to facilitate discussion regarding the use and impact of AI in financial services in the UK.
In this update, we have outlined the AIPPF’s findings, in particular, the best practice firms can adopt in relation to its AI policies and procedures.
The AIPPF was established by the BoE and the FCA and was tasked with deepening the understanding of AI and technology in financial services, including examining what AI regulation might be implemented in the future. Between 2020 and 2021, the AIPFF held numerous meetings attended by BoE and FCA representatives, as well as representatives from key organisations and banks, where the main aspects of AI in financial services were discussed and debated.
The AIPPF’s Final Report, published on 17 February 2022 (“Report”), outlines the work and findings of the AIPPF over the previous 2 years. It made findings in three key areas: (1) data, (2) model risk, and (3) governance, and set out clear suggestions to firms for “good practice” in each of these areas which we have summarised below. UK firms utilising any form of AI are advised to consider the good practice suggestions and whether they can be incorporated and adopted into their AI strategy.
|Good practice suggestions for firms|
The AIPPF did not make any recommendations in relation to new policy or regulation for AI – it stated that the regulatory response to AI is complex and there is a risk that regulation would be “too strict and too early”. Instead, the AIPPF stressed that many current general standards and regulations may be suitable, requiring only tweaks or clarification in order to apply to AI. It was implicit in the report that there is no intention, at least in the short term, for the implementation of a new set of AI specific rules to apply to UK firms. Rather, the AIPPF recommended that the FCA and PRA “provide greater clarity on existing regulation and policy”.
Until the regulators provide such further clarity, firms are advised to consider and, where possible, adopt the good practice principles which were outlined in the AIPPF Final Report. Doing so will place firms in the best position to respond to any further guidance or clarification which is expected from the regulators in the near future.
6 June 2022
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