What happened: MFA submitted high-level recommendations for the European Commission (EC) to consider in connection with the use of AI in the financial sector. MFA’s letter responds to the EC’s targeted consultation on AI in the financial sector.
Why it matters: The consultation does not propose new regulations and is not intended to lead to duplicative policy work with respect to AI in the financial sector. However, it does begin a broader conversation about the use AI in financial services that will extend throughout the next five-year EC mandate.
MFA on the issue: MFA offers four high-level recommendations for the EC to consider with respect to the use of AI in the financial sector:
- Alternative asset managers use AI to enhance existing processes and procedures
- Fiduciary duty and other existing regulations already sufficiently address potential concerns posed by the use of AI tools
- Past attempts to regulate specific technologies confirm that regulators should remain technology neutral and prioritize regulating activities
- Potential use cases for AI are still developing and could unlock important benefits
MFA has also commented on AI work streams in other jurisdictions, including in response to the U.S. Treasury’s Request for Information on uses, opportunities, and risks of AI in the financial services sector.
MFA President and CEO, Bryan Corbett, issued the following statement in conjunction with the letter:
“AI has tremendous potential in financial services and the alternative asset management industry. It is already deployed, with human oversight, to enhance efficiency and deliver better outcomes for investors, which include European pension funds. MFA appreciates the European Commission solicitation of industry input. Regulators should take a technology-neutral, activities-based approach to AI regulation. This will leverage existing regulations to protect investors and markets without unintentionally stifling innovation and EU economic competitiveness.”
What’s next: The EU’s AI Act entered into force this summer and implementation of numerous provisions will take place over the next two to three years. The incoming EC will continue to examine the applications of AI within the financial services sector. MFA engages regularly with senior EC officials to highlight how alternative asset managers strengthen EU markets and attract capital to European capital markets.
