The Financial Conduct Authority has found that AI governance is lagging behind deployment across financial firms, publishing its first detailed paper on AI in financial services as deployment continues to accelerate.
Please see below a media alert, along with industry response.
All the best,
Edwina
FCA paper finds weak oversight, unclear accountability and monitoring gaps
London, 20 October – The Financial Conduct Authority has found that AI governance is lagging behind deployment across financial firms, with AI adoption continuing to race ahead. A joint survey conducted by the FCA and the Bank of England found that 86 per cent of firms now use AI.
The FCA has identified governance as an area where firms are not investing sufficiently, with systems being deployed before accountability has been established. In some firms, senior managers delegated AI development entirely to technical teams without adequate checking or documented processes.
The FCA also found that reviewers were accepting AI recommendations without first verifying their accuracy. Firms were found to monitor model metrics rather than outcomes, which can mean issues go undetected until it is too late.
The FCA has confirmed it will not introduce AI-specific rules, relying instead on the Consumer Duty, the Senior Managers and Certification Regime (SM&CR) and SYSC governance requirements.
Stuart Harvey, CEO of Datactics commented: “Firms treat AI governance as a second thought once AI pilots have gone live, but the reality is that if governance teams do not ensure the data behind the AI models is ready and of good quality then the model is destined to fail. Decisions about what data is used, where it comes from, how it is stored need to be made from the beginning, otherwise this isn’t something that can be bolted on later.”
“A ‘human in the loop’ is being treated as the safety net, but having a person nearby to oversee an AI agent and ensure the model is running as it should only makes it safe if the person can actually understand what safe looks like. Otherwise, if a person doesn’t understand the data or the risks, or have the authority to stop a running AI model, they’re not in the loop, they’re just there.”
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ENDS
About Datactics
Datactics is a UK-based software company specialising in augmented data quality, entity resolution, and data matching platforms for heavily regulated industries. Datactics works with NHS, Thomson Reuters and Home Office. Learn more about Data quality for AI governance on the Datactics website.
