ICMA responds to FCA consultation on current and future uses of Artificial Intelligence (AI) in UK financial services, as well as the financial services regulatory framework

 

30 January 2025 ICMA has responded to the FCA's consultation on current and future uses of Artificial Intelligence (AI) in UK financial services, as well as the financial services regulatory framework.

  • ICMA members highlight the importance of distinguishing between AI techniques that have existed within firms for a long time and are being applied to new processes, and new AI techniques that are still largely in the proof-of-concept stage, such as Gen AI.
  • ICMA members reinforce the importance of having internal risk frameworks and human oversight in place to manage the risks associated with AI. Included in these frameworks are a series of explainability requirements to enable testing, validation, and model development, whilst also encouraging a general duty of understanding and responsibility for AI use across the firm.
  • Currently, organisations in financial services are subject to a number of technology agnostic frameworks that apply safeguards to technology use generally, including AI, such as AIFMD, UCITS, MIFID II, MIFIR, DORA, the PRA Rulebook, and SM&CR. Much of the industry’s use of AI has successfully operated under these regulatory frameworks to date.
  • Remaining competitive on a global scale and being able to capitalise on innovation opportunities in the industry is an important factor for the well-functioning of international debt securities markets.
  • Specific examples of how the regulatory regime is applied to use cases in financial services could benefit firms looking to incorporate AI safely. It may also help to clarify whether firms that operate in the financial markets on a quasi-level, are included under the scope of financial services regulation. One area of concern is that these types of firms may pose a risk to the stability of the financial services industry if they believe to fall
    outside of the scope of regulation, and therefore do not apply the same level of safeguards to their activities as traditional institutions.


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