Amid mounting concerns over fraudulent use of artificial intelligence (AI) to defraud consumers, the UK’s Financial Conduct Authority (FCA) warned on Tuesday (12 December) that AI regulation for finance should not be hastily put in place.
While the European Union recently granted provisional approval for a groundbreaking laws aimed at regulating AI, a global first, pressure is mounting on other jurisdictions to follow suit.
During a session with the Treasury Select Committee in Parliament, FCA CEO Nikhil Rathi underscored the importance of exercising caution before enacting comprehensive regulations.
Rathi acknowledged that AI is a rapidly evolving field and cautioned against a rushed regulatory approach.
Rathi stated, “The serious organised criminals don’t have anyone regulating them, and they are making unfettered use of AI to manipulate markets.”
Despite the EU’s move towards comprehensive AI regulation, Rathi argued against immediate adoption, asserting that Britain already possesses a regulatory framework that addresses key concerns.
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He highlighted existing rules which ensure market integrity and hold senior managers accountable for risk monitoring.
“In that sense, we are differently placed to a number of our major competitors around the world in having that framework,” Rathi remarked.
Moreover, Rathi suggested that the current regulatory framework equips financial firms with the necessary systems and controls to promptly address and mitigate any AI-related issues that may arise.
Looking ahead, the Bank of England’s Financial Policy Committee announced last week that it would further deliberate on the implications of AI in the financial sector in the coming year.
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