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UK: FCA publishes its approach to AI regulation
On April 22, 2024, the Financial Conduct Authority (FCA) published its 'AI Update' detailing its approach to the regulation and supervision of artificial intelligence (AI) following the release of the Government's response to the AI Regulation White Paper consultation.
The FCA highlighted that its regulatory approach focuses on identifying and mitigating risks rather than prohibiting specific technologies. Further, the FCA explained that its approach involves assessing the implications of technologies like AI, blockchain, and cloud infrastructure on financial markets and consumer protection.
According to the FCA, the principle of proportionality guides its regulatory actions, aiming to balance restrictions with the expected benefits of AI. The FCA noted that it follows an outcomes-based approach to regulation that allows firms flexibility to innovate and adapt to technological changes while ensuring consumer protection against emerging harms. Notably, the FCA stated that many AI-related risks are not unique to AI and can be managed within existing regulatory frameworks.
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