The Financial Conduct Authority (FCA) announced that the Digital Regulation Cooperation Forum (DRCF) published stakeholder views in response to the call for inputs on two discussion papers, issued in April 2022; one discussion paper addressed the benefits and harms posed by algorithmic systems while the other paper discussed the existing landscape, role of regulators, and future outlook of algorithmic auditing.
The DRCF received 31 responses from a broad range of stakeholders, detailing their views on the findings and conclusions set out in the discussion papers. The majority of respondents were supportive of the two papers and welcomed collaboration of the four digital regulators—namely Competition and Markets Authority (CMA), the Information Commissioner’s Office (ICO), the Office for Communications (Ofcom), and the Financial Conduct Authority (FCA)—on algorithmic processing. With regard to the benefits and harms of algorithmic processing, most respondents agreed that the paper had captured majority of pressing issues, including risks to fairness, transparency, and competition. However, some stakeholders addressed the need for closer attention to the impact of algorithms on the environment as well as to workers and their experiences of the labor market.
With regard to the paper on algorithmic auditing, stakeholders were generally supportive of the hypotheses on role of regulators for clarifying how third-party audits could support the regulatory process and for providing guidance on the way third parties should conduct audits. However, certain stakeholders cautioned against the idea of creating mechanisms for information sharing between third-party auditors and regulators primarily due to security and privacy concerns. In addition to sharing views on the contents of each paper, respondents also provided comments on the wider DRCF workplan and its engagement with other regulators or organizations to maximize overall impact.
Going forward, DRCF plans to use the feedback gathered through this exercise to inform the next stage of the DRCF project on algorithmic processing and relevant work across the individual regulators. DRCF, as part of the work program 2022/23, plans to undertake three workstreams: improving the capability of regulators to undertake algorithmic audits, understanding the role of third-party algorithmic audit in supporting the regulatory process, and promoting transparency in the procurement of algorithmic systems (such as content moderation or age verification technology). The findings of this research will get published in early 2023.
Keywords: Europe, UK, Banking, Regtech, DRCF, Algorithmic Processing, Algorithmic Auditing, Digital Markets, Digital Innovation, Ofcom, CMA, ICO, Algorithms, Artificial Intelligence, FCA
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