“Our laws apply equally to AI and traditional systems and processes. This means businesses must consider how corporate and financial services laws, along with related guidance, apply when they explore, develop, and utilize AI technologies,” Longo stated.

Rather than creating new interpretations, ASIC relies on the expertise of its seasoned staff to manage industry submissions. Recent trials revealed AI's limitations, particularly in processing industry input effectively.

During the trial, ASIC experimented with using AI to interpret and summarize submissions received by parliamentary committees. Despite the AI-generated summaries being accurate, they lacked depth and nuance.

“Based on our trial, the outcomes were not sufficiently robust for us to use at this time,” Longo admitted.

Adding to Longo's observations, Graham Jefferson, ASIC's Digital and Legal Transformation lead, noted that staff-generated summaries had greater nuance and complexity compared to those created by AI, which he described as “quite generic.”

In its exercise, ASIC found AI's limited capacity to discern nuanced or contextual elements to be a significant drawback. In this light, ASIC's current efforts focus on assessing how banks, credit providers, insurers, and financial advisers employ AI and advanced data analytics.

Despite these hurdles, ASIC sees potential in AI to boost its efficiency and productivity. In its submission to the Senate Committee, ASIC outlined several areas where AI could make a meaningful impact:

  • Efficiently processing a high volume of misconduct reports and reportable situations.
  • Quickly detecting and disrupting financial wrongdoings, such as scams.
  • Analyzing vast sets of data to pinpoint potential threats and prioritize response efforts.
  • Reducing reliance on standardized, high-volume manual processes.
  • Improving the capture and storage of information.

While AI's current generation capabilities do not yet meet ASIC's intricate requirements for regulatory interpretation, the potential for AI to streamline operational efficiencies remains significant. Therefore, financial services entities must recognize that while they may adopt AI, they cannot abdicate their regulatory responsibilities.

For further details, this update reflects findings initially reported by financial planning news on 22 May 2024.