On 23 January 2020, the Financial Conduct Authority (FCA) and the Bank of England (BofE) announced that they will be establishing the Financial Services Artificial Intelligence Public-Private Forum (AIPPF).
The aim of the AIPPF will be to progress the regulators' dialogue with the public and private sectors to better understand the relevant technical and public policy issues related to the adoption of artificial intelligence (AI) and machine learning (ML). It will gather views on potential areas where principles, guidance or good practice examples could support the safe adoption of such technologies, and explore whether ongoing industry input could be useful and what form this could take. The AIPPF will also share information and understand the practical challenges of using AI and ML within the financial services sector, as well as the barriers to deployment and any potential risks or trade-offs.
Participating in the AIPPF will be by invitation only, with the final selection taken at the discretion of both the BofE and the FCA. Firms that are active in the development of AI and the use of ML will be prioritised over public authorities and academics. It will be co-chaired by Sir Dave Ramsden, deputy governor for markets and banking at the BofE, and Christopher Woolard, Executive Director of Strategy and Competition at the FCA.
This comes at a time when financial services institutions such as banks and fund managers rely heavily on technology to facilitate increased regulatory reporting that is both timely and accurate, and when the stakes can be high for institutions that can face multi-million pound penalties for failing to meet their reporting obligations, despite having invested the time and money in systems to meet their reporting obligations. The regulators themselves are also looking to reduce the onus on their own supervisors as they continue to receive ever-increasing data sets each week from financial services firms, as explored in the BofE's discussion paper called 'Transforming data collection from the UK financial sector' published on 7 January 2020.
The BofE's discussion paper marked the start of its process to work closely with firms to ensure it and the FCA improves data collection, and eases the administrative and financial burden on firms to deliver that data; the announcement of the AIPPF marks the next step in this process.
In a similar way, the European Commission (EC) established its High-Level Expert Group on Artificial Intelligence in October 2019, to support the implementation of its AI vision, namely that AI must be "trustworthy and human-centric". Notable recommendations made by the group relevant to the banking sector included developing and supporting AI-specific cybersecurity infrastructures, upskilling and reskilling the current workforce, and developing legally compliant and ethical data management and sharing initiatives in Europe. The EC has also plans to set out rules relating to AI over the next five years (as from June 2019).
There is a clear indication that the regulators both in and outside the UK are taking a keener interest in how regulated entities deploy AI and machine learning. Given the direction of regulatory travel planned by the EC, we expect this emerging trend to result in similar regulatory guidance and possible rules in the UK over the coming years.
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