MPs ask who's responsible when AI crashes the UK finance system

UK financial regulators must conduct stress testing to ensure businesses are ready for AI-driven market shocks, MPs have warned.

The Bank of England, Financial Conduct Authority, and HM Treasury risk exposing consumers and the financial system to "potentially serious harm" by taking a wait-and-see approach, according to a House of Commons Treasury Committee report published today.

During its hearings, the committee found a troubling lack of accountability and understanding of the risks involved in spreading AI across the financial services sector.

David Geale, the FCA's Executive Director for Payments and Digital Finance, said individuals within financial services firms were "on the hook" for harm caused to consumers through AI. Yet trade association Innovate Finance testified that management in financial institutions struggled to assess AI risk. The "lack of explainability" of AI models directly conflicted with the regime's requirement for senior managers to demonstrate they understood and controlled risks ...