Financial Law and Regulation Seminars: 
Fulfilling Consumer Duty through Artificial Intelligence

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The Financial Conduct Authority (FCA) in the UK launched the Consumer Duty in October 2023. This regulation is one of the first and significant initiatives which explicitly prioritise consumer interests in banking regulation, aiming not only to promote bank stability but also to transform regulatory tools into mechanisms that foster both consumer loyalty, leading to stable profits for banks. However, bank regulation on AI has overlooked its impact on consumers and their expectations on bank service, this paper explores how AI should be regulated to fulfill the Consumer Duty. A gap analysis employing four thematic factors – User, Regulator, Social Acceptance, and Bank Factors – reveals three key regulatory gaps in using AI as a consumer protection mechanism: a lack of specific implementation guidelines, opacity in AI processes, and inadequate regulatory tools and expertise. The paper advocates for the development of discipline-specific AI ethics frameworks, enhanced AI literacy programs for both bank staff and consumers, and a “sunshine test” mechanism for evaluating AI applications. This framework signifies the “regulator factor” and enforces a consumers-centric approach vital in building an efficient financial services landscape in the digital era.

About the Speaker:

Dr Sau Wai Law (Samuel) is an Honorary Fellow of the Asian Institute of International Financial Law (AIIFL) at The University of Hong Kong. He has over 15 years of banking experience in Hong Kong and the United Kingdom, having held roles in credit risk management, private banking, strategic planning, and, most recently, bank supervision. He serves as a panel member of the British Standards Institution’s Sustainable Finance Committee and is also a trainer, course reviewer, study guide writer, and subject reviewer for the Hong Kong Institute of Bankers’ Certified Banker Programme and the Enhanced Competency Framework. He currently resides in the United Kingdom.

Chair: Professor Giuliano Castellano, Director of AIIFL and Associate Professor, Faculty of Law, The University of Hong Kong