The House of Commons Treasury Select Committee has launched an inquiry to consider the potential effects of the increased use of AI in financial services. It wants to understand how financial services can use AI whilst protecting consumers against potential risks.

The Bank of England has published statistics which show that 75% of firms are already using AI, with a further 10% planning to use it over the next three years. However, the Committee points out that the launch of "DeepSeek" has reminded observers of the volatility and rapidly evolving nature of the AI market. 

The full terms of reference for the inquiry are: 

How is AI currently used in different sectors of financial services and how is this likely to change over the next ten years? 

  • Are there particular areas of financial services that are adopting AI more quickly and at higher rates of penetration than others? Are Fintech firms better suited to adopting AI? What percentage of trading is driven by algorithms/AI? 
  • Are financial services adopting AI at a faster rate than other sectors in the economy? 

To what extent can AI improve productivity in financial services? 

  • Where are the best use cases for AI? Which particular transactions may benefit from AI? 
  • What are the key barriers to adoption of AI in financial services? 
  • Are there areas where the financial services should be adopting GenAI with little or no risk? 
  • Are there likely to be job losses arising from AI in financial services and if so, where? 
  • Is the UK's financial sector well-placed to take advantage of AI in financial services compared to other countries? 

What are the risks to financial stability arising from AI and how can they be mitigated? 

  • Does AI increase the risks relating to cybersecurity? 
  • What are the risks around third-party dependencies, model complexity, and embedded or 'hidden' models? 
  • How significant are the risks of GenAI hallucination and herding behaviour? 
  • Are the risks of having AI tools used in the financial sector concentrated in the hands of a few large tech companies? To what extent do the AI financial market tools rely on social media outlets? For example, trading algorithms using social media posts? 

What are the benefits and risks to consumers arising from AI, particularly for vulnerable consumers? 

  • What benefits to consumers might arise from using AI in financial services?  for example, could AI be used to identify and provide greater assistance to vulnerable consumers? 
  • What is the risk of AI increasing embedded bias? Is AI likely to be more biased than humans? 
  • What data sharing would be needed to make AI more effective in financial services, and will there be a need for legislative change to achieve that? 
  • Are there any current or future concerns around data protection and AI in financial services? 
  • What sort of safeguards need to be in place to protect customer data and prevent bias? 

How can the government and financial regulators strike the right balance between seizing the opportunities of AI but at the same time protecting consumers and mitigating against any threats to financial stability?

  • Are new regulations needed or do existing regulations need to be modified because of AI? 
  • Will the government and regulators need additional information, resources or expertise to help monitor, support and regulate, AI implementation in financial services? 

The call for evidence ends on 17 March 2025.

Treasury Committee calls for evidence about use of AI in financial services

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