ASIC Chairman Joe Longo Urges AI Regulation Reforms

Joe Longo, the Chairman of ASIC, has expressed concern about the adequacy of existing regulatory frameworks to manage the rapid advancements in artificial intelligence (AI) technology within the finance sector. This highlights ASIC attention to AI regulation and recognition of the need for updated oversight measures to address emerging challenges and risks in the financial industry.

However, he also sees this as an opportunity for regulatory reforms and proactive oversight to safeguard consumers and support businesses’ responsible use of AI, potentially leading to a more efficient and secure finance sector. Longo highlighted ASIC’s commitment to fostering a safe and ethical AI landscape in finance, noting that while AI offers substantial benefits, its misuse could result in significant consumer harm. “We believe that effective AI tools may bring enormous benefits to businesses and end-users,” Longo stated. “On the other hand, irresponsible or malicious use of AI tools may cause considerable harm to consumers.”

ASIC has prioritized the examination of AI and advanced data analytics across various financial sectors, including banking, credit, insurance, and financial advice. This ongoing review assesses how financial entities identify and mitigate consumer risks. Longo pointed out a “governance gap” between existing regulations and the ideal framework required to address AI-related risks, emphasizing the need to bridge this divide to prevent potential harm.

ASIC Chairman Joe Longo Urges AI Regulation Reforms

As part of ASIC’s vision to become a leading digitally enabled and data-informed regulator by 2030, the organization has embarked on a digital transformation program. This proactive approach reaffirms ASIC’s commitment to upholding existing laws while advocating for a balanced regulatory framework that supports innovation without compromising ethical standards, instilling confidence in the audience about the organization’s preparedness for AI advancements.

In addition to these developments, ASIC recently revoked Everest Asset Management Pty’s Australian Financial Services (AFS) license due to non-compliance with financial reporting obligations.

Longo’s push for stronger AI regulation coincides with a worldwide emphasis on overseeing AI. The European Central Bank (ECB) has similarly advocated for closer supervision and proper regulation of AI in finance, pointing out potential market failures and related risks. This international agreement on the necessity of AI supervision, exemplified by the European Union’s introduction of the thorough AI Act, highlighting various AI technologies’ risk levels, reaffirms the significance and immediacy of ASIC’s endeavors.

Since late 2023, ASIC has been intensifying its focus on AI, recognizing its potential to aid in combating financial crimes. The regulator plans to enhance its enforcement efforts to protect consumers and small businesses in the evolving technological landscape. With these initiatives, ASIC aims to ensure that the integration of AI in the financial sector is managed responsibly, aligning with global efforts to mitigate risks while harnessing the benefits of technological advancements.

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