On 16 July 2019, the FCA published a speech by Christopher Woolard (Executive Director of Strategy and Competition at the FCA) entitled The future of regulation: AI for consumer good.
Key points in the speech include:
- the FCA recently carried out a joint survey with the Bank of England to assess the current use of AI in financial services. They found that the use of AI in regulated firms was best described as nascent. The technology is employed largely for back office functions, with customer-facing technology largely in the exploration stage;
- in the latest cohort of the FCA regulatory sandbox, the regulator has seen a number of tests relating to digital identity;
- if firms are deploying AI and machine learning they need to ensure they have a solid understanding of the technology and the governance around it. However, while the issue of governance should be familiar to regulated firms, the question of what this looks like in practice for AI is novel. There is a growing consensus around the idea that algorithmic decision-making needs to be ‘explainable’; and
- the FCA has partnered with The Alan Turing Institute to explore the transparency and explainability of AI in the financial sector. A joint publication and a workshop are planned for early next year.