The Financial Conduct Authority (FCA) is exploring the potential for “robo-regulation”, but says any move towards automation will still require human judgment at its core.
Speaking at an the PIMFA Women’s Symposium in London today (19 May), the FCA’s chief data, information and intelligence officer Jessica Rusu described it as a “wonderful opportunity” to use technology to enhance how regulation is delivered.
However, she stressed that a fully automated system remains “some way off”.
Rusu was responding to a question from an audience member who asked whether she could envisage a future in which an AI-powered regulatory bot could sit within firms, identifying and flagging issues before consumers are harmed.
She joked that her “life’s goal was to replace myself with a robot – the robot regulator”, before outlining the FCA’s current thinking.
“I do think there’s a wonderful opportunity for robo regulation. I would say it would take some time to get to that state, because it’s always about human judgment.
“There are fine judgments that need to be made about whether a firm is doing the right thing or the wrong thing.
“Many of those interpersonal interactions come when we meet an executive team in a regulatory context or supervisory context. You meet an executive, you meet the board, and you get a sense of their culture and their intentions.
“So I think there is always going to be a bit of a blend, but I absolutely think that there’s a wonderful opportunity for more automation, which is something that we’re looking at.”
Rusu added that firms must keep pace with criminals when it comes to adopting AI, warning that falling behind could leave consumers exposed.
“If our regulated firms do not adopt AI at the same pace that criminals do, we will be on the back foot,” she said.
“Our regulated firms are our first line of defence in protecting consumers against fraud and scams.
“So, it’s really important that firms are investing in tech as much as the bad actors.”
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She said the regulator is already using AI and data analytics to identify and disrupt fraudulent activity, including monitoring online platforms.
“My team do a lot of web scraping and social-media monitoring, so we have hundreds of sites and information that we scoop up and do advanced analytics on, so that we can detect accounts for profiles that are doing nefarious activities on social media.
“We report them back to Big Tech, and we want them, of course, to take action. I do think there’s more that Big Tech can do to be more proactive. They certainly have the budgets and the skill sets and the resources to be more proactive on that front.”
Rusu also pushed back on the idea that regulation acts as a barrier to innovation, arguing instead that the UK is well positioned to support responsible AI adoption.
“Regulation is often seen as this great barrier. We should be cutting red tape, but the UK has an opportunity to be best placed for AI adoption and responsible AI adoption, because we’re taking this balanced approach.
“We’re not saying, ‘OK, no, you can’t do this, you have to stop doing that.’ The UK government has been very proactive about technology but about safety as well, protecting consumers from criminals by enabling technology to really grow the market.”