Artificial Intelligence (AI) has the potential to bring huge benefits, or, in some cases, significant risks. In the financial services sector, the possibilities are vast, including increasing productivity and innovation and creating new jobs. AI also helps compliance teams work faster and more efficiently, significantly reducing the time needed for research or interpreting regulations. Additionally, AI makes detecting fraud and money laundering faster and more precise.

At the forefront of this change is Complyport, a leader in regulatory compliance solutions. With its AI tool – ViCA (Virtual Compliance Assistant), Complyport helps businesses manage complex regulations more easily. ViCA offers valuable insights and support, ensuring that AI-driven systems stay aligned with ethical and regulatory standards, leading the way for a more efficient and compliant future in financial services.

Ethics

Increasing reliance on AI presents a range of ethical challenges, particularly in relation to consumers and accountability. Any collection and processing of sensitive personal data by AI models may result in unconsented use of consumer data. Due to its autonomous self-learning nature, AI systems can also infringe on the ability of consumers to make informed choices, distorting what may be in their best interest due to its biases.

AI has the potential to reduce accountability. The complexity of these models can result in a lack of transparency, as it is difficult for consumers to understand how decisions are made, hindering accountability. Reliance on AI models can also serve to reduce human oversight, resulting in a further lack of accountability. AI also has the potential to be used as a tool to cover up mistakes due to its generative capabilities. Among these is the ability to invent fake case studies, allowing businesses in the event of consumer harm, to cover up and justify any structural flaws in their procedures and dodge accountability.

Despite its potential for innovation, AI models carry with them the potential to be manipulated. To mitigate damage and maintain a course towards innovation, controls and checks are needed.

The FCA’s stance

To ensure the innovation potential of AI remains unimpeded, the FCA are seeking to take a pragmatic approach in the regulation of artificial intelligence by incorporating the use of AI into existing rules and practices. This is intended to continue encouraging the development of AI innovation without the need for developing a separate regulatory framework.

The FCA’s approach is based on five pro-innovation regulatory principles:

1. Safety, Security, Robustness: Measures should aim to identify security and safety risks posed by AI systems, ensuring that due diligence is conducted on AI providers and that business services have robust security measures in place, ensuring they can withstand and recover from AI-disruptions.
2. Fairness: Measures must be tailored to recognise and mitigate biases in AI systems, ensuring that AI-driven advice and decisions are in the best interest of consumers. Consumers in turn must be informed about AI use and how they can challenge AI-driven decisions.
3. Appropriate Transparency and Explainability: The use of AI systems must adhere to UK GDPR requirements for transparent data processing to avoid consumer harm. To this end the objectives, risks and benefits of each AI system must be clearly communicated to consumers. Detailed explanations as to how AI systems make decisions and impacts outcomes must be condensed into simple explanations for non-technical staff and consumers.
4. Accountability and Governance: Ensure that senior managers are aware of AI use within their functions and that staff are capable of integrating AI into their responsibilities, requiring the development of a certain level of AI literacy. Measures should include robust governance procedures, including protocols for approving Ai systems and periodic reviews to ensure ongoing compliance with FCA rules and regulations.
5. Contestability and Redress: Complaint handling procedures must allow consumers to contest AI decisions, measures must adhere to UK GDPR requirements by setting out consumers redress options for outcomes caused by automated decision making.

How can firms prepare for the changes?

Firms are expected to take steps and better align their practices with the FCA’s evolving expectations. They can do this by:

• Familiarising themselves with the FCA’s expectations regarding the use of AI, including compliance with existing regulations and the need for transparency and fairness in AI systems.
• Conducting thorough risk assessments of AI technologies being used or planned. Identify potential risks, including biases, data quality issues, and the impact of AI decisions on customers.
• Implementing robust data governance frameworks to ensure that data used for AI models is accurate, secure, and ethically sourced. This includes establishing clear data management policies.
• Regularly validating and testing AI models to ensure their effectiveness and compliance with regulatory standards. This includes monitoring outcomes and adjusting models as necessary.
• Maintaining comprehensive documentation of AI systems, including their design, implementation, and impact assessments. Firms should be prepared to provide this documentation to the FCA upon request.
• Firms should foster a culture of responsible AI use within the organisation. Provide training to staff on the ethical implications of AI and the importance of compliance with FCA regulations.
• Staying engaged with the FCA through consultations and feedback opportunities.
• Working collaboratively across departments, including compliance, legal, and IT, to ensure a unified approach to AI governance and regulatory compliance.

How Complyport can help

As an innovator in financial services and AI in compliance, Complyport stands out for its deep expertise in regulatory compliance, its commitment to personalised service and its AI capabilities in optimising procedures and applying AI based solutions. Partner with Complyport for expert guidance, proactive solutions, and peace of mind in navigating the complexities of AI in financial services. Our dedicated AI team can provide tailored training to staff on the ethical implications of AI, and the importance of AI in compliance, fostering a culture of responsible AI use.

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The post AI in Financial Services first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .

ViCA is rapidly becoming an indispensable resource for compliance professionals seeking to lower costs and reduce the time needed for complex compliance queries. By leveraging advanced Artificial Intelligence (AI), ViCA provides immediate, accurate and reliable assistance, enabling users to navigate the complexities of regulatory compliance with ease. ViCA is being adopted across the financial services sector by governance, risk and compliance professionals.

“Momentum amongst key compliance, risk, governance and legal professionals is a testament to ViCA’s value in the compliance industry,” said Luis Parra, Managing Director of ViCA. “Our goal is to empower professionals with tools that not only enhance efficiency but also provide a seamless user experience. The new ViCA website and user interface embodies this commitment.”

ViCA’s new website https://vica.chat

Key Features and Unique Selling Propositions of ViCA

• Instant Access to Expertise: ViCA delivers immediate answers to compliance queries, eliminating the need for prolonged research.
• Cost Efficiency: By automating routine compliance tasks, ViCA helps organisations significantly reduce operational costs.
• User-Friendly Interface: The revamped website and user environment ensures intuitive navigation, making it easier for users to access ViCA’s features.
• Continuous Learning: ViCA’s AI engine evolves with the regulatory landscape, providing up-to-date information and insights supported by Complyport’s experts.
• Secure and Confidential: Robust security measures ensure that all interactions and data remain confidential.

Expanded Services and Partnerships

In addition to ViCA’s success, Complyport continues to evolve its suite of services:

• ComplyPortal Enhancement: The ComplyPortal tool has been upgraded to help streamline Financial Promotions marketing approvals with AI features that help identify issues and suggest modifications to improve compliance. These features streamline compliance management and the approval process.
• Training Platform with LGCA: Through a strategic collaboration with the London Governance & Compliance Academy (LGCA), Complyport offers a comprehensive training platform. This initiative provides professionals with cutting-edge educational resources to stay ahead in the ever-changing compliance environment.
• RegTech Solutions: Complyport delivers advanced RegTech solutions for transaction reporting that combine advanced technology, consultative guidance and a tenured client service team—by leveraging the capabilities of MAP FinTech for EMIR, MiFIR and SFTR transaction reporting.

Human Expertise When You Need It

While ViCA offers unparalleled AI assistance, Complyport understands the importance of human interaction. Our team of expert consultants is always available to provide personalised support. “Talk to a human whenever needed,” emphasises Luis Parra, Managing Director of ViCA and ComplyPortal. “Our consultants are here to ensure that you receive the extra guidance that only experienced professionals can offer.”

ViCA Offers Multiple Account Types to Cater to Different User Needs

ViCA offers multiple plans to cater to different user needs, with the primary difference being the number of available queries per month. All features are accessible across all plans and users can top up by purchasing additional queries at any time.

• Free Account: Try ViCA for free with up to 20 queries. No credit card required.
• Basic Account: Provides 50 queries per month, ideal for individuals who need regular compliance assistance.
• Standard Account: Offers 100 queries per month, suitable for professionals requiring more frequent support.
• Pro Account: Includes 300 queries per month, designed for organisations with extensive compliance needs.

Regardless of your plan, you can purchase additional queries whenever needed, providing flexibility to suit your compliance support requirements.

Join ViCA’s free plan to experience the future of compliance support.

About Complyport

Complyport is a leading compliance consultancy, delivering tailored solutions to firms in the financial services sector. With over 23 years of regulatory expertise, we combine deep industry knowledge with innovative technology to help clients navigate complex compliance challenges. Since 2011, RegTech has been at the core of our approach, offering software designed by compliance experts to streamline processes, evaluate and test compliance programmes, maintain robust audit trails and help mitigate risks.

The latest addition to our RegTech solutions is ViCA (Virtual Compliance Assistant)—a revolutionary AI-powered tool that significantly improves access to critical compliance information. Our solutions enable firms to manage compliance more efficiently, allowing them to focus on higher-value business activities.

The post ViCA AI Tool Gains Momentum Among Governance, Risk, Compliance and Legal Professionals first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .

The Financial Conduct Authority (“FCA”) has set out its key priorities for the coming year in its Business Plan for 2018/19, along with its annual Sector Views. Inevitably, the priority for its discretionary activity is preparing for and implementing the changes resulting from European Union withdrawal (“Brexit”).

Additionally, seven priorities cut across different financial sectors and the other priorities listed relate to the seven specific financial sectors the FCA regulates.

This year’s Business Plan reflects the high level of resource the FCA needs to dedicate to Brexit to carry out the following priorities:

• Working with the Government.
• Ensuring an appropriate transition for EEA firms.
• Working with regulated firms and monitoring the risks to FCA objectives.
• Working towards operational readiness.
• Cooperating with international partners.

In addition, the FCA intends to advance some aspects of work to introduce a new duty of care provision for firms, beginning with the launch of an initial Discussion Paper, Feedback Statement and final version of its ‘Our Approach to Consumers’ paper in summer 2018.

Cross-Sector Priority Areas

• Firms’ culture and governance which should drive behaviours and produce outcomes likely to benefit consumers and markets.
• High-cost credit, building on the significant impact already made in the market.
• Tackling financial crime, including fraud, scams and anti-money laundering to make the UK financial services sector a hostile place for criminals and a safe place for consumers.
• Data security, resilience and outsourcing since technology plays a pivotal role in delivering financial products and services.
• Innovation, big data, technology and competition which are driving change in markets.
• The treatment of existing customers to ensure that they do not get less attention or receive poorer outcomes than new customers.
• Long-term savings, pensions and intergenerational differences which reflects the changing UK population and their financial needs.

Sector Priority Focus

1. Wholesale Financial Markets

• Clarifying FCA approach to market integrity
• Reviewing money laundering in capital markets
• Monitoring firms’ compliance with new conflicts of interest requirements
• Addressing operational resilience
• Monitoring firms’ compliance with FCA rules on Initial Public Offerings
• Publishing final rules and FCA approach to industry codes of conduct for unregulated markets

2. Investment Management

• Finalising rule changes following the Asset Management Market Study
• Working with European Supervisory Authorities in the implementation and review of the Packaged Retail and Insurance-Based Investments Products Regulation (“PRIIPs”)
• Consulting on new rules and guidance on liquidity management
• Considering the extension of governance remedies to with-profits and unit-linked funds
• Assisting the Treasury in the development of a new prudential regime for investment firms authorised under the Markets in Financial Instruments Directive (“MiFID II”)
• Publishing research that explores the rise of passive investment

3. Retail Lending

• Assessing creditworthiness in consumer credit
• Launching a Market Study on Credit Information
• Publishing the interim report on FCA Mortgage Market Study
• Reviewing the commission between credit brokers and other firms
• Ensuring the debt management sector works well for consumers
• Reviewing the motor finance market
• Reviewing the retained Consumer Credit Act provisions

4. Pensions and Retirement Income

• Developing a joint pensions strategy with The Pensions Regulator
• Potentially extending the remit of Independent Governance Committees for workplace pension schemes
• Helping consumers avoid scams

5. Retail Investments

• Assessing the impact of the Financial Advice Market Review (“FAMR”) and the Retail Distribution Review (“RDR”)
• Reviewing high-risk and complex investments
• Evaluating FCA interventions on Contracts for Difference
• Publishing report on the Investment Platforms Market Study
• Raising awareness of fraud and scams

6. Retail Banking

• Continuing to help firms prepare for ring fencing
• Developing a payments sector strategy
• Delivering the revised Payment Services Directive (“PSD2”)
• Continuing FCA awareness campaign on the Payment Protection Insurance redress deadline

7. General Insurance and Protection

• Implementing the Insurance Distribution Directive (“IDD”)
• Publishing interim report from the Wholesale Insurance Brokers Market Study
• Concluding initial diagnostic work on general insurance distribution chains
• Publishing the findings from FCA Call for Input on access to travel insurance
• Evaluating the effectiveness of 2015 FCA rules on Guaranteed Asset Protection insurance

Sector Views 2018

The annual Sector Views issued by the FCA cover all the markets it regulates and give an overall view of how each sector is performing, based on the data held by the FCA and its view as at mid-2017.

The FCA describes the sector, the need the sector seeks to fulfil, the issues and developments the FCA are seeing and the impact of change, and are developed in three stages:

1. Understanding the sector.
2. Assessing how the sector is performing and what is driving change in the sector.
3. Identifying the key themes for consumers, firms and the sector more widely.

Data Protection and GDPR related issues

The FCA intends to review the use of data by financial services firms, including:

• machine learning analysis of big data pools;
• algorithmic trading; and
• the wider use of artificial intelligence.

It believes this will help them better assess both potential opportunities and harm and where they may need to intervene.

The FCA will also further develop its relationship with the Information Commissioner’s Office in anticipation of the General Data Protection Regulation (“GDPR”) coming into force in May 2018, with the intention of publishing an updated Memorandum of Understanding (first issued in 2014) setting out how the two organisations will work together in future.

While the ICO will regulate GDPR, complying with GDPR requirements is something the FCA will consider under, for example, the requirements in the Senior Management Arrangements, Systems and Controls (“SYSC”) sourcebook. Under SYSC, firms should establish, maintain and improve appropriate technology and cyber resilience systems and controls.

The post FCA publishes its Business Plan for 2018/19 first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .