Australia's Securities and Investment Commission (Asic) is calling on financial services and credit licensees to strengthen their governance practices to keep pace with the rapid adoption of artificial intelligence.

Asic’s first market review of AI use among 23 licensees revealed a potential gap between AI implementation and governance frameworks, even as current AI applications remain relatively conservative. Asic Chair Joe Longo stressed the importance of updating governance systems to manage future AI challenges effectively, as more than 60% of licensees plan to expand AI usage, potentially transforming its consumer impact.

The review also found that nearly half of the surveyed licensees lacked policies addressing consumer fairness or bias, and even fewer had guidelines for disclosing AI use to clients. Longo emphasized the urgency of addressing these shortcomings, warning that inadequate governance could lead to significant risks, including misinformation, unintentional discrimination, and data security failures. Such issues could harm consumers and undermine market confidence. He urged licensees to proactively consider their obligations to consumer protection and not wait for new AI regulations to be implemented.

AI governance challenges are not limited to Australia. A U.S. survey by ACA Aponix and the National Society of Compliance Professionals showed that only 32% of compliance professionals have established AI governance groups, and even fewer have risk management frameworks or testing programs in place. Lisa Crossley, Executive Director of NSCP, highlighted this concerning trend, noting that while the financial sector is eager to harness AI's potential, many firms lack adequate safeguards. The survey underscores the growing need for robust governance protocols to manage AI use responsibly as adoption accelerates.