Author: Calimere Point – calimerepoint.com
As AI continues to advance rapidly, establishing robust governance mechanisms has become increasingly essential. The evolving nature of AI technologies necessitates a proactive approach to ensure ethical use, compliance with regulations, and the management of associated risk.
Recent regulatory initiatives in the UK and Europe are reshaping how organisations approach AI, particularly in the financial services sector.
The UK’s pro-innovation framework
The UK has implemented a sector-based, non-statutory framework for AI governance that emphasises five core principles: safety, transparency, fairness, accountability, and contestability. Key regulators, such as the Financial Conduct Authority (FCA) and the Information Commissioner’s Office (ICO), have been tasked with integrating these principles into their operations. Notably, the ICO published its strategic approach to AI on May 1, 2024, which outlines how it will oversee AI applications while leveraging existing data protection laws. This framework aims to strengthen regulatory oversight while fostering innovation in various sectors.
The EU AI Act: A stricter regulatory landscape
Set to take effect in early 2025, the EU AI Act introduces stringent regulations for high-risk applications, particularly in the financial sector. Organisations using AI for credit scoring, insurance, or recruitment will face rigorous compliance requirements, including documentation, transparency, and risk management standards. These measures aim to prevent discrimination and ensure data privacy, protecting consumers in an increasingly AI-driven market. As companies work to align their AI systems with existing EU financial laws, such as the Digital Operational Resilience Act (DORA), the challenges of compliance and systemic security become more pronounced.
Addressing the rise of generative AI
With the growing interest in generative AI, especially in media and customer service, the ICO has been actively consulting on data protection and accountability for AI as a Service (AIaaS). This includes clarifying the responsibilities of organisations regarding data control, which significantly impacts the AI supply chain. In financial services, the FCA is monitoring the ethical use of generative AI, addressing concerns related to model transparency and customer data ethics.
Cross-sector collaboration for cohesive governance
Both UK and EU regulators recognise the importance of collaboration across sectors to develop a cohesive AI governance framework. Initiatives like the AI Opportunities Action Plan and the UK AI Safety Institute aim to align public and private sector efforts, focusing on the risks associated with third-party AI service providers. The ICO’s strategic plan emphasises a risk-based approach, asserting that while risks should be mitigated, complete elimination is not always necessary.
Navigate the future of AI responsibly
It’s essential for organisations to proactively prepare for the changes ahead. At Calimere Point, we are committed to partnering with you to develop a comprehensive AI governance strategy that not only ensures regulatory compliance but also fosters trust and fuels innovation.
Contact us today to discover how we can support your AI governance needs and empower you to navigate the future of AI with confidence.
