UK FCA, BoE, and PRA Publish Discussion Paper on Adopting AI in Financial Services

On October 11, the Bank of England (BoE), the Prudential Regulation Authority (PRA), and the UK Financial Conduct Authority (FCA) (together, the Supervisory Authorities) published a discussion paper (DP5/22) on the safe and responsible adoption of artificial intelligence (AI) in financial services (Discussion Paper). The Discussion Paper forms part of the Supervisory Authorities' AI-related program of works, including the AI Public Private Forum and is being considered in light of the UK government's efforts towards regulating AI. The purpose of the Discussion Paper is to provide a platform for assessing the desirability of regulating AI technology adoption in UK financial services by safeguarding each of the Supervisory Authorities' own objectives. The BoE's objectives are to maintain financial stability and support the UK government's economic policy. The PRA focuses on the promotion of safety, soundness, and competition for services provided by PRA-authorized firms and insurance firms, while the FCA's strategic objective is to ensure market integrity, effective competition, and protection of consumers in the UK financial system. The Supervisory Authorities consider it useful to distinguish what constitutes AI by either (1) providing a more precise legal definition of what AI is (and what it is not); or (2) viewing AI as part of a wider spectrum of analytical techniques with a range of characteristics for mapping out AI.