The Australian Securities and Investments Commission (ASIC) Chair Joe Longo has called for reforms in the regulation of artificial intelligence (AI) within the finance sector, warning that current frameworks may not adequately address the rapid pace of technological change.
ASIC Chair Urges AI Reforms in Finance Sector
Speaking at the Select Committee on Adopting Artificial Intelligence, Longo emphasized ASIC's support for Australian businesses' safe and responsible use of AI. However, he cautioned that irresponsible or malicious use of AI tools could cause considerable harm to consumers.
"We believe that effective AI tools may bring enormous benefits to businesses and end-users," Longo said. "On the other hand, irresponsible or malicious use of AI tools may cause considerable harm to consumers."
ASIC has made the use and impact of AI technologies in the financial system a key priority. The regulator is currently reviewing the use of AI and advanced data analytics in the banking, credit, insurance, and financial advice sectors. The review aims to test how licensees identify and mitigate potential consumer harm.
Longo highlighted the existence of a "governance gap" between the current regulatory environment and the ideal framework needed to address AI-related risks. He stressed the importance of bridging this divide to prevent AI-facilitated harms adequately.
“Our vision at ASIC is to become a leading digitally enabled and data-informed regulator by 2030. To support this vision, we have commenced a digital transformation program,” the regulator stated.
Longo concluded by reaffirming ASIC's commitment to enforcing existing laws and working towards a regulatory framework that balances innovation with responsible and ethical use of AI in the financial sector.
"ASIC will continue to enforce these laws as it always has," Longo said. "We welcome any questions the Committee may have."
In another update today (Wednesday), ASIC also canceled Everest Asset Management Pty's AFS license due to its failure to prepare and lodge the required financial statements.
Similar Voices from Various Institutions
This month, the European Central Bank (ECB) also warned about using AI in finance, emphasizing the need for closer monitoring of the technology and the introduction of appropriate regulations. It highlighted the importance of addressing potential market failures and associated risks.
Two months earlier, the European Union's parliament had passed the world's first comprehensive regulations for artificial intelligence (AI). The EU AI Act, proposed in 2021, categorizes AI technologies according to their risk levels, ranging from "unacceptable" to low risk.
Meanwhile, ASIC has been focusing on AI since the latter half of 2023, suggesting that AI could soon aid financial regulators in combating criminal activities. The regulator has announced plans to intensify its enforcement efforts to protect consumers and small businesses.
