Source: Bank for International Settlements

The Bank of England, along with UK regulatory authorities, has released an updated approach to supervising artificial intelligence and machine learning in the financial sector. The framework outlines prudential standards and governance expectations for banks and insurers that utilize AI, focusing on model risk, accountability, transparency, and data integrity.

Regulators stress the need for clear documentation of AI systems, robust oversight, and continuous monitoring of potential risks related to bias, fairness, and resilience. The guidance highlights the importance of aligning AI use with existing financial conduct and consumer protection rules, as well as ensuring ethical and responsible innovation.

The update reflects growing recognition of AI’s role in transforming finance and the necessity of proactive regulation to safeguard the stability, integrity, and trust in the UK’s financial system. The move also aligns with international efforts to develop common