UK’s AI regulation strategy: Guidance over new laws
The Law Society, led by chief executive Ian Jeffery, argues that current legal frameworks can manage AI risks and that regulators should prioritise practical guidance rather than new statutes. That position feeds into the government's AI Growth Lab approach, which favours experimentation and sectoral guidance to support uptake while protecting the public.
Addressing AI’s core challenges
Financial organisations face specific uncertainties when adopting AI: data security, oversight of models, legal liability for automated decisions, and safe anonymisation of client information. The Law Society highlights these as professional and ethical questions for which lawyers need clear instructions on how existing duties apply when AI is used.
Balancing innovation with trust
The rationale for using established rules is that duties around confidentiality, competence, and client care already impose meaningful obligations on professionals. By clarifying how those duties apply to AI, regulators can support responsible deployment without stifling product development or investment. For the finance sector, that translates into preserving market trust while allowing faster model testing and integration.
Implications for finance and AI development
For institutional investors, fintech teams and AI developers, a guidance-first strategy means regulatory risk may be more predictable but remains governed by professional standards. That environment tends to favour firms that can demonstrate robust governance, audit trails and model validation. It also signals to capital markets that the UK aims to remain pro-innovation while protecting consumers.
Practical next steps for financial firms
- Map existing compliance and ethical duties against each AI use case.
- Maintain documentation on data sources, model testing and decision audit logs.
- Clarify contractual liability with vendors and clients where AI influences outcomes.
- Engage with sector guidance, including outputs from the AI Growth Lab.
Ian Jeffery's message is clear: focus on operational clarity and professional responsibility. For finance, that approach could speed adoption while keeping investor and customer confidence intact.
