The Bank of England and Financial Conduct Authority (FCA) have concluded a year-long investigation into the role of data, model risk and governance in the use of AI in financial services.
A report from Finextra outlined that the report said that clarity of regulatory expectations on the adoption and use of AI is a key component of fostering innovation.
Namely, regulators should provide greater clarity on existing regulation and policy but such clarification and any new guidance should not be overly prescriptive and should provide illustrative case studies.
Launched in October 2020, The Artificial Intelligence Public-Private Forum (AIPPF) brought together experts from financial services, the tech sector and academia, along with public sector observers from other UK regulators and government.
The forum reportedly said that data, model risk and governance are key. Issues at the data stage can get baked in as model inputs; but even with the best data, issues can arise in the modelling stage; while complex AI systems create their own governance challenges.
In addition, regulators should identify the most important and/or high-risk AI use-cases in financial services with the aim of developing mitigation strategies and/or policy initiatives.
The report also recommended continued engagement between the public and private sectors and suggests the creation of an industry consortium to help address challenges and create standards.
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