Deadline approaching for the European Commission consultation on AI in the financial sector

Purpose

The goal is to identify the main AI "use" cases and the benefits, barriers and risks related to the application of AI in the financial sector. The consultation questionnaire is structured in three parts and includes questions on the development of AI, specific use cases in finance and the ¹EU AI Act 2024 (the "Act") in relation to the financial sector. The Council of the European Union cast its final vote on the Act on 21 May 2024 and it was published in the EU Official Journal on 13 July 2024. Please see our article for further insight on the provisions of the Act. Feedback received from stakeholders will enable the Commission to assess market developments and risks related to AI as well as the implementation of the Act and existing financial services legislation.

The consultation is focused on the objectives outlined in the financial sector acquis and the Act. It is not intended to lead to policy work that would create new requirements in relation to the use of AI in the financial sector or to address other policy areas, such as competition policy. Rather, the intention is to enhance the effective implementation of these existing legal frameworks, ensuring that the application of AI is integrated into the financial sector in a manner that promotes innovation and compliance with regulatory and legal standards.

Target audience

The target audience of the consultation are financial services stakeholders, whose views are desired to enable the Commission provide guidance to the financial sector on the implementation of the Act. In particular, responses are invited from financial firms already providing, deploying, or using AI systems.

Financial services regulatory implications

This consultation is EU-related. In the UK, the UK FCA itself has published an "AI Update" paper in April this year. The FCA say they want "to promote the safe and responsible use of AI in UK financial markets and leverage AI in a way that drives beneficial innovation. We see beneficial innovation as a vital component of effective competition."

In addition, they are focused on how firms can safely and responsibly adopt the technology as well as understanding what impact AI innovations are having on consumers and markets. This includes close scrutiny of the systems and processes firms have in place to ensure our regulatory expectations are met. And we believe an evidence-based view, one that balances both the benefits and risks of AI, will ensure a proportionate, effective and pro-innovation approach to the use of AI in financial services.

All responses need to be submitted by 13 September 2024 and can be responded to via this link.