What we were able to change with the Financial Services and Markets Bill – part three
Artificial intelligence amending financial services…
In my final article of this series, setting out the changes we were able to achieve to the Financial Services and Markets Bill as it progressed through the Lords, I wanted to address my proposals on artificial intelligence that were not accepted by the Government.
You can barely move right now for news headlines about AI. The key questions appearing to revolve around whether it will take our jobs before it wipes us out. Whether an optimist or a pessimist, when faced with such existential angst, better surely to focus on action and consider how we can make the best out of AI whilst being well aware of its risks.
To put it another way, if AI is to human intellect what steam was to human strength, we all get the picture: steam literally changed time.
I put down amendments to the Bill centred on the ethical use of AI in our financial services industry and a proposal that every business should have an AI officer responsible for its use.
The full wording of the AI officer amendment:
“Designated artificial intelligence officer
- The Secretary of State must by regulations provide that companies operating in the financial services sector who use artificial intelligence (“AI”) must have a designated AI officer.(2) The AI officer under subsection (1) has responsibility for ensuring the—(a) safe,(b) ethical,(c) unbiased, and(d) non-discriminatory use of AI.(3) The AI officer under subsection (1) also has responsibility to ensure that data used in any AI technology is unbiased.(4) Regulations under this section are subject to the affirmative procedure.”
Opening the debate, I put it plainly…
“The purpose of both amendments is predicated on the fundamental truth that AI is already extraordinarily powerful and pervasive across our financial services.”
At the previous stage of the Bill the Minister had suggested, rightly, that from a policy perspective, the issue of an AI officer should probably not be restricted to the financial services sector. To this end, I asked…
“In Committee, the Minister perhaps rightly suggested that it would be wrong from a policy perspective to have an AI reporting officer in financial services and not consider this across the whole of the economy. If so, will my noble friend take back to the Treasury the need to work across departments—with the Business Department and the newly formed Department of Science, Innovation and Technology —to consider an approach where an AI-responsible officer on the boards of all companies would be considered.”
It also seemed to me that for the benefit of all those involved in the provision of those services; in this context, it would be a good topic to work up for the AI summit which will be taking place in London later this year.
Though not accepting the amendments, the Minister’s response was not absent of promise…
“The Government are firmly of the view that artificial intelligence has the opportunity to revolutionise every aspect of our lives, and we are committed to unlocking the enormous benefits that it can bring, in a way that is fair and allows everyone in society to benefit.
“In March 2023, the Department for Science, Innovation and Technology published proposals for a new regulatory framework for AI regulation in the government’s AI regulation White Paper. This sets out a proportionate, adaptable framework for AI regulation, underpinned by five potential cross-sectoral principles, which include concepts such as fairness, safety and transparency, to strengthen the current patchwork approach to regulating AI indirectly.
“Through the proposals for the new AI regulatory framework, we are building the foundations for an adaptable approach that can be adjusted to respond quickly to emerging developments. The vast majority of industry stakeholders we have engaged with so far agree that this strikes the right balance between supporting innovation in AI while addressing the risks it presents.
“We are committed to a proportionate approach to AI regulation that allows us to maximise the benefits that AI can bring to the economy and society and can effectively respond to the fast-moving risks presented by AI.”
Specifically, in relation to financial services the Minister said…
“…the FCA, the PRA and the Bank of England recently published a discussion paper on how regulation can support the safe and responsible adoption of AI in financial services. Last week, the Government announced that the UK will host the first major global summit on AI safety this autumn.”
Before concluding…
“…the Government remain committed to an effective and consultative approach to the use of artificial intelligence within the financial services sector. Noble Lords can be reassured that the Government will continue actively to involve Parliament in decisions in this area, particularly in relation to the future creation of a digital pound.”
It was good to get such a full Ministerial answer albeit disappointing not to get the amendments accepted. But as I finished in the debate…
“I hope that we can have increasing public engagement and public debate around AI to ensure that everybody is enabled to take the benefits, understand the risks and understand that they can be mitigated, managed and eradicated by regulators and legislators so that the UK can be the place where ethical AI is championed for the benefit of businesses, consumers and communities alike. I very much look forward to the global summit later this year.”
I tabled similar AI amendments to the previous Financial Services Bill and will keep up the pressure on this important issue, despite – again – not getting legislative change, the level of Parliamentary involvement going forward does seem much more positive.