What is the Financial Conduct Authority’ s stance on Artificial Intelligence?
Artificial intelligence( AI) is becoming increasingly prominent in financial services. It has the potential to transform the way firms serve their clients and increase access to financial services. There has already been plenty written about the benefits and drawbacks of AI and how its use could impact financial planning firms, but what’ s the FCA’ s stance on these developments? And how could AI play a part in a changing advice landscape under the Advice Guidance Boundary changes?
Well, the FCA has published various updates on AI already and, in short, has stated it supports the‘ safe and responsible adoption of AI in UK financial markets’. The regulator goes on to confirm that it does not intend to introduce extra regulations for AI and will instead rely on existing frameworks to mitigate risks associated with AI. So, to which existing frameworks is the FCA referring? We outline below four key actions for any firm looking to adopt an AI tool in a way that could influence client outcomes.
Threshold conditions
The threshold conditions are governing pillars which underpin a firm’ s regulatory status. They include the condition that a firm’ s business model must be suitable and have adequate‘ non-financial resources’, i. e. in other words senior management have the necessary skills and competence to understand the AI tool and how it operates.
ACTION: Take time to understand how the tool works and carry out due diligence to provide reassurance around safeguards and operation of the tool.
Sandy McGregor Director of Policy Simplybiz
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