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MPs Warn: AI's UK Financial Risks Ignored
20 Jan
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.
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.
