Compliance considerations in AI

Though the United Kingdom has no purely AI-focused regulatory framework, financial services firms should prepare themselves for heightened supervision over their deployment of AI and ensure compliance with a multitude of diverse and broadly-focused requirements. Alexandra Green and Michael Sholem set out how to approach this task.

Alexandra Green (alexandra.green@macfarlanes.com) and Michael Sholem (Michael.Sholem@macfarlanes.com) are partners in the Financial Services Regulation team at law firm Macfarlanes in London. With thanks to senior knowledge lawyer Rachel Serene (rachel.serene@macfarlanes.com) for her contribution to this article.

Artificial intelligence

The use of AI by financial services firms is not new but the use cases for it have grown significantly in the past few years particularly given the advent of generative AI. Firms are fast recognising that AI can be deployed at all levels of their organisation enhancing efficiencies and optimising the customer experience. In expectation that use cases will continue to evolve, the Financial Conduct Authority has recently launched a number of AI-focused initiatives, including November's AI Input Zone. The FCA is using the AI Input Zone (a development of the FCA's AI Lab) to gather stakeholders' views about current and future uses of AI along with the requisite financial services regulatory framework. In light of these developments, financial services firms should prepare themselves for, if not additional regulation, at least heightened supervision over their deployment of AI.