Why the issue of AI regulation must take centre stage during the UK election campaign

By Vikas Krishan, Chief Digital Business Officer and Head of the EMEA region at Altimetrik

With the UK general election less than a month away, the impact of AI and its risks and opportunities must be a central focus for all political parties. The impact of AI on business and society demands thorough consideration due to the huge impact it will and is already having on business and society as a whole. The UK government estimates that the UK AI market will grow to $1 trillion by 2035.

It is an imperative for all UK political parties deeply engage with the promises and challenges of AI, shaping their manifestos to ensure they give due consideration to address how they will both protect consumers and inspire innovation through this transformative technology.

A proposal in waiting

Unlike their EU counterparts, the previous administration has taken a much more flexible approach to AI regulation. The proposal created by the previous administration favours a flexible, principles-based approach implemented by existing regulators. This approach is like that used by Financial Services Regulators in the UK and builds a framework for the interpretation and application to different industry sectors. It is understood that an approach that is strongly pro-innovation and pro-safety should underpin all political decisions made on AI now and in the future.

It is clear, however, that any attempt to provide guidance or regulation on AI must be robust in addressing key concerns including around compliance, over-regulation, and its impact on competitiveness within the UK market. These considerations must be a priority for whoever resides at Number 10 this July, ensuring a balance between fostering innovation and maintaining effective regulation and protection for consumers. There are also learnings to be taken from regulators in other industries, the main one of which is a collaborative effort between the technology producers of AI and government will be crucial.

Innovation at risk?

Financial services have been early adopters of AI and it is fair to say that across the board the industry is now very much entrenched in its workings. Businesses are using AI for more material business areas including use cases such as anti-money laundering (AML). The vast data in AML compliance and the growing complexity of criminal methods require financial institutions to continually adopt new tools. Consequently, AI technology has become essential to the financial compliance landscape. It is here that without deep consideration around regulation, innovation could be at risk if regulatory powers become too stringent and unwieldy. The next government must construct all future regulations with agility and ensure the benefits of AI applications are equal to their complexity and ensure that the necessary investment into regulation is fit for purpose.

The need for comprehensive engagement

Any government proposal under a new administration must ensure AI policy is created in partnership with experts. The need to consider compliance and the issues that come with this is a unifying issue that both parties must address thoroughly through their manifestos, not least in addressing the potential AI has for reinforcing and elevating societal bias.

For example, financial services firms should expect that they will need to notify customers when they are interacting with an AI system, like a customer service chatbot, or when evaluating loan applications. To harness the power of AI effectively, financial firms must be required to establish robust data governance policies. It is here that financial institutions and governments alike must collaborate and understand that AI’s success rests on the quality of data provided. Without a Single Source of Truth (SSOT), an organisation’s ability to measure risk and opportunity diminishes significantly.

The upcoming election is a crucial opportunity for political parties to engage deeply with AI’s promises and challenges. Robust data governance and clear communication about AI’s interactions with customers will be central to the success of any regulatory framework. Given the wide-reaching impact of AI, it is critical that the UK Government get it right so that the UK is not only seen as global leader when it comes to AI regulation and guidelines but also ensuring the continued success of the UK economy beyond our borders.

Regardless of the election outcome, AI’s significance will continue to rise in both the professional and social aspects of our lives. Due to its potential to reinforce political biases, it is crucial for all parties to consider its social impact from an economic standpoint. Appropriate and flexible regulation is imperative in this context. Flexible, because we know AI’s influence will continue to evolve and regulation needs to be such that it can flex to this changing environment.

All political parties must take the issue of AI seriously by addressing these issues thoroughly within their election manifestos. This crucial if the British public, including those who work in business and financial services, are to be able vote for a brighter, safer future where AI’s transformative potential is fully realised.