What is the Treasury Committee's stance on AI in UK finance?

The Treasury Committee criticizes the UK government, Bank of England, and FCA for a 'wait-and-see' approach to AI risks, warning of serious harm.

How is AI currently used in the UK financial sector?

Over 75% of UK financial firms use AI for administrative tasks, processing claims, and assessing creditworthiness, among other core operations.

What potential risks does AI pose to financial stability, according to MPs?

MPs are concerned AI could amplify herd behavior during economic shocks, increasing the risk of a financial crisis and exacerbating cybersecurity risks.

Home / Business and Economy / MPs Warn: AI's UK Financial Risks Ignored

MPs Warn: AI's UK Financial Risks Ignored

20 Jan

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Summary

UK financial system exposed to serious harm by AI risks.
Regulators accused of 'wait-and-see' approach to AI.
AI use in UK finance could cause financial crisis.

MPs Warn: AI's UK Financial Risks Ignored

An influential parliamentary committee has strongly criticized the UK government, the Bank of England, and the Financial Conduct Authority (FCA) for their inaction on the risks posed by artificial intelligence in the financial sector. MPs on the Treasury committee argue that this "wait-and-see" approach exposes consumers and the broader financial system to significant harm.

With over 75% of City firms now utilizing AI for tasks ranging from administrative automation to credit assessment, concerns are mounting. These include the potential for AI to disadvantage vulnerable consumers and the risk of AI-driven herd behavior amplifying economic shocks, potentially leading to a financial crisis.

The committee is urging regulators to implement new stress tests and provide clear guidance on consumer protection rules related to AI by the end of the year. While regulators acknowledge the concerns, they maintain that existing frameworks are sufficient and that they are actively assessing AI-related risks.