Regulators Address AI Responsibility and Innovation

The FCA and ICO have been working together to dispel myths around data sharing and alleged regulatory constraints on innovation. For example, in 2023 they clarified that banks are not prevented under data protection laws from informing customers about better savings deals has already led to improvements in customer communications by banks. To further support innovation, the FCA and ICO are extending their services for innovators, ensuring that firms engaging with the FCA’s AI Lab or the ICO’s Regulatory Sandbox receive consistent and joined-up regulatory advice. Their partnership extends through the Digital Regulation Cooperation Forum (DRCF), which also includes Ofcom and the Competition and Markets Authority and is piloting initiatives such as the AI and Digital Hub to provide additional support.

The statement acknowledges that while most firms understand the broad regulatory requirements, there is a demand, especially among smaller firms, for clearer examples of best practice and more opportunities for engagement. In response, the ICO is developing a statutory code of practice for organisations developing or deploying AI and automated decision-making systems, and the FCA is planning further engagement with smaller firms through a roundtable to understand their specific challenges. The ICO has already separately published detailed guidance on AI.

The report identifies that a key concern for firms is the allocation of responsibility when AI tools are developed by third parties, especially when these tools make automated decisions that affect customers, or problems arise. The ICO reflects on these issues in its analysis on how controllership should be allocated across the generative AI supply chain as part of its consultation series. Similarly, the FCA has issued guidance clarifying the responsibilities of firms when adopting generative AI solutions.

The regulators state that they are committed to providing further visibility of existing support services, such as the FCA's Innovation Hub and the ICO’s Innovation Services. The Statement indicates their belief that the obstacle to innovation in the industry is not regulation, but rather uncertainty and a lack of familiarity with regulations. Therefore, the ICO and FCA state that they are committed to reducing this uncertainty by providing clearer, more coordinated, and more visible support to firms. 

The joint statement is available here.