ASIC chair addresses AI regulation challenges at UTS symposium

Current regulation around AI may not be enough

ASIC chair addresses AI regulation challenges at UTS symposium


By Mina Martin

ASIC Chairman Joe Longo (pictured above), has delivered a keynote address at the UTS Human Technology Institute’s Shaping Our Future Symposium, shedding light on the current state of AI regulation and governance.

Clearing misconceptions: AI is not the “Wild West”

Longo debunked the notion that AI is an unregulated "Wild West," highlighting that AI, including its development and usage, is already subject to various Australian laws. Laws related to privacy, online safety, corporations, intellectual property, and anti-discrimination apply to AI across all sectors of the economy.

“The responsibility towards good governance is not changed just because the technology is new,” Longo said. “Whatever may come, there’s plenty of scope right now for making the best use of our existing regulatory toolkit…

“For this reason, and within our remit, ASIC will continue to act, and act early, to deter bad behaviour whenever appropriate and however caused. We’re willing to test the regulatory parameters where they’re unclear or where corporations seek to exploit perceived gaps.”

Longo emphasized ongoing efforts to review the use of AI in banking, credit, insurance, and advice sectors, probing oversight, risk management, and governance arrangements.

“This will give us a better understanding of the actual AI use cases being deployed and developed in the Australian market – and how they impact consumers,” he said. “We’re testing what risks to consumers licensees are identifying from the use of AI, and how they’re mitigating against these risks.”

Bridging the governance gap

Longo acknowledged the rapid progress of AI and questioned whether the current regulatory framework can adapt to its pace effectively. He posed critical questions regarding transparency, explainability, and the potential harm AI could cause to consumers, emphasizing the need for oversight and prevention of unfair practices.

One question, for instance, would be, “Will the ‘rapid progress’ of AI carry along with it the vulnerable man or woman struggling to pay their bills in the midst of a cost-of-living crisis, whose credit score is at the whim of AI-driven credit scoring models that may be inadvertently biased?” Longo said.

He pointed out that it’s not far-fetched to consider that credit providers using AI systems to identify “more favourable” credit risks might inadvertently discriminate against vulnerable consumers. The challenge arises when dealing with 'opaque' AI systems, making it challenging to identify the mechanisms behind such discrimination. Even if existing laws are effective in penalizing wrongful actions, their capacity to proactively prevent harm may be limited.

Longo highlighted concerns about potential discrimination, lack of recourse for affected individuals, and challenges in understanding AI decisions. He questioned the ability of the current regulatory framework to prevent harm and suggested that questions of transparency, explainability, and rapidity deserve careful attention.

Moving forward: Strengthening the regulatory framework

In conclusion, Longo emphasised ASIC's commitment to ensuring the safety and integrity of the financial system and positive outcomes for consumers and investors.

He called for a continuous evaluation of the current regulatory framework, strengthening it where necessary, and asking the fundamental question: “Is this enough?” in the ever-evolving landscape of AI.

Longo also stressed the duty of all participants in the financial system to balance innovation with responsible, safe, and ethical use of emerging technologies. He stressed that existing obligations around good governance and the provision of financial services remain applicable and crucial, regardless of technological advancements.

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