What the UK's six AI principles mean for financial services

The regulatory framework is to be built around six cross-sector principles that the UK government outlined in July and focus on'high risk' AI – in an approach to regulating AI that varies significantly to that proposed in the EU with the planned AI Act. Formal regulatory guidance is likely to be issued in the UK to guide firms' approach to using AI in due course, but we have assessed each of the six principles against the views expressed by regulators via the AI Public Private Forum (AIPPF) – a forum set up by the Bank of England and the Financial Conduct Authority (FCA) – in an effort to understand what is likely to be expected of firms. Undertaking an AI audit and assessing how AI use aligns with business objectives are just two of the measures that firms should consider to best prepare themselves for the new regulatory regime. A common theme across both the EU and UK proposals is ensuring the safe use of AI. Detailed UK guidance on risk categorisation is limited at this stage, but financial services firms would be wise to undertake an audit of their AI use and create an inventory of all AI applications that are in use or development.