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FCA CEO Says UK Rules Already Address Challenges of AI

The Financial Conduct Authority (FCA) in the United Kingdom said Tuesday (Dec. 12) that the country already has a robust framework in place to tackle the challenges of artificial intelligence (AI).

Addressing parliament’s Treasury Select Committee, FCA CEO Nikhil Rathi emphasized the importance of not rushing to regulate every aspect of AI, Reuters reported Tuesday.

Rathi said that AI is a rapidly accelerating topic and that its implications are not yet fully understood, so it is crucial to approach AI regulation with caution and humility, according to the report.

He also highlighted the fact that serious organized criminals are exploiting AI to manipulate markets. These criminals are not subject to regulation, making it imperative for financial firms to be proactive in addressing anti-fraud and cyber risks, the report said.

The FCA urges firms to consider these risks as they adopt AI technologies and ensure that appropriate measures are in place to prevent misuse, according to the report.

The UK already has a comprehensive set of rules to ensure market integrity and protect consumers, Rathi said, per the report. He added that the country’s framework places it in a favorable position compared to its major competitors.

The existing rules hold senior managers accountable for monitoring risks, ensure fair outcomes for consumers, and provide a foundation for addressing AI-related problems, Rathi said, according to the report.

Rathi’s comments came days after the European Union reached a provisional deal on landmark rules governing the use of AI. The deal, reached Friday (Dec. 8), covers various aspects of AI use, including governments’ use of AI in biometric surveillance and the regulation of AI systems like ChatGPT.

The provisional approval makes the EU’s AI regulation the first of its kind globally and puts pressure on other jurisdictions to follow suit, the Tuesday Reuters report said.

On Wednesday (Dec. 6), England’s central bank said AI may pose a risk to the country’s financial system.

“It’s so complicated in many of its forms that understanding exactly what the black box delivers can be very hard,” Bank of England Governor Andrew Bailey said while announcing the release of a report on AI risks.