The FCA claims it does not regulate technology, only outcomes, but this line of thinking can only go so far with AI, writes Omar Salem

“Read my lips: no new taxes” said George Bush senior as he accepted the Republican presidential nomination in August 1988. A couple of years later, he signed off tax rises of $146.3bn (which was a lot of money in those days).

Last year, the FCA mouthed its own promise: no new AI regulations. The FCA’s vow will surely also, in time, have a collision with reality. The reason is simple: AI is a profound new technology that will uniquely and radically impact almost every aspect of financial services.

The FCA has espoused the principle of “same risk, same regulatory outcome”, yet it is clear that AI poses unique risks (while offering many opportunities). The FCA cannot credibly say it has considered every area of regulation and decided that not a single drop of AI specific regulation is needed. In fact, its joint discussion paper with the PRA suggests the contrary.

The FCA and PRA say that AI trading could make markets vulnerable to flash bubbles or crashes, emphasise the importance of humans being involved in AI decision-making and sound the alert that AI could be used to exploit consumer behavioural biases, such........

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