The FCA and ICO will investigate whether the Consumer Duty and other factors are potentially slowing down the development of AI in the regulated sector.

In a letter to trade associations this week, the two regulators reported a lack of confidence among some firms in developing and adopting AI.

The letter, dated yesterday (10 March), was addressed to Trade Association Chairs/CEOs and jointly signed by Nikhil Rathi, chief executive of the FCA, and John Edwards, information commissioner at the ICO.

They suggested the reticence of firms to adopt AI was down to data protection and the Consumer Duty, after the two were identified to be in the top three regulatory "constraints" to AI deployment in a recent FCA and Bank of England survey.

The survey also revealed potential uncertainty around the interactions between the two differing regulatory regimes, the letter said.

To help encourage firms to adopt AI, the regulators will hold a roundtable on 9 May where they hope to find out what extra regulatory support needs to be introduced to help firms that are currently holding back on AI.

The London meeting will ask attendees to explain the areas of regulatory uncertainty and challenges they face in respect of AI adoption.

It will also consider how the ICO and FCA can work together with industry to provide greater regulatory certainty and support growth.

Finally it will focus on the specific areas of data protection and financial regulation where attendees need greater regulatory support to enhance their ability to innovate and adopt new technologies.

The letter said: “As opportunities for AI deployment within financial services continue to grow, the FCA and ICO recognise the ongoing importance of providing the sector with regulatory clarity and certainty around the use of these and other technologies in ways that support responsible innovation and create benefits for the public.”

The two organisations said they have a strong track record of collaborative work to help industry navigate the requirements of UK financial and data protection regulations, including through regular ICO participation in FCA TechSprints, joint statements on customer communications, and involvement in the Digital Regulation Cooperation Forum’s (DRCF) AI and Digital Hub pilot.