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8 October, 2019
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FCA will investigate what AI in finance means for “future of regulation”

17 July 2019
UK markets regulator partners with Alan Turing Institute for report on AI ethics

Christopher Woolard, Executive Director of Strategy and Competition at the FCA, has said the UK markets regulator will be looking at how AI will change consumer finance, and how it should respond.

In a speech delivered at the Alan Turing Institute’s conference on AI ethics in the financial sector, Woolard announced that the FCA is partnering with the Institute to explore “the transparency and explainability of AI”. 

The partnership will publish a report on the practical and ethical challenges posed by AI and machine learning, with a workshop planned for early 2020. Identifying the Facebook/Cambridge Analytica scandal of 2018 as a serious blow to consumer trust in data sharing, Woolard said that regulators, industries and the public must work together to develop an understanding of the risks – and benefits – AI can bring in the context of open banking in particular

“We want to see boards asking themselves: ‘what is the worst thing that can go wrong’ and providing mitigation against those risks,'' said Woolard. He claimed that a universal regulatory approach to AI in financial services is impossible as these risks will vary. “After all, the risks around [algorithmic] trading will be totally different to those that occur when AI is used for credit ratings purposes or to determine the premium on an insurance product.” 

Woolard added: “We all know that with access to the rich datasets facilitated by open banking, the potential for AI for the good of consumers is huge [but] a key determinant of future competition will be whether data is used in the interests of consumers or used by firms to extract more value from those consumers.” 

 

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