MFA urges FSB to preserve flexible approach to AI sound practices

Guidance built around large banking institutions could limit responsible AI adoption across the financial sector

Washington, D.C. - MFA urged the Financial Stability Board (FSB) to revise its proposed sound practices for responsible artificial intelligence (AI) adoption to ensure that any adopted framework remains flexible, principles-based, and proportionate in a comment letter submitted yesterday. MFA supports the FSB's goal of promoting responsible use of AI but cautioned that practices are continuing to evolve at a rapid pace. A static, one-size-fits-all requirements could limit the usefulness of the framework and stifle innovation.

"The FSB's AI sound practices need to work for the entire financial sector, not exclusively tuned to the resources and practices of the largest banks," said Jillien Flores, MFA Chief Advocacy Officer. "A proportionate, flexible framework that builds upon existing industry risk management practices and duties of care requirements will enable firms of all sizes to responsibly deliver AI's benefits to markets and investors."

The proposed sound practices are largely designed around the structures and resources of large, systemically important financial institutions. Alternative asset managers have different business models, risk profiles, and often have smaller teams. Applying a bank-centric model across the financial sector could make AI adoption too costly for many firms, limiting innovation and reducing the benefits AI can deliver to investors, markets, and the broader economy. A flexible, proportionate framework would allow firms of all sizes and types to use AI with appropriate risk management.

Read the full comment letter here.