Summary
This submission, authored by PK Senyo, Professor of FinTech and Information Systems and Associate Dean for Research at Southampton Business School, University of Southampton, responds to the UK Parliament Treasury Committee’s call for evidence on AI in financial services (11 April 2025). It argues that while AI offers significant benefits, such as personalized financial advice, enhanced fraud detection, accessibility features like voice assistance, and alternative‐data credit scoring that can help vulnerable groups, it also poses serious risks to financial stability and consumers. These include AI‐driven cyberattacks, data breaches, model manipulation, algorithmic trading vulnerabilities based on misinterpreted social-media sentiment, hallucinations falsifying financial data, and systemic concentration in a few large AI providers. To address these threats, the author recommends extending market-abuse regulations to cover AI manipulations with strict penalties, mandating real-time monitoring and automatic blocking of illicit trades, establishing global AI governance standards with stress testing of AI infrastructure, enforcing explainability and regular bias audits for critical AI systems, and embedding human “circuit-breakers” in automated decision-making. For consumer protection, the submission calls for mandated explainability, hybrid human–AI service models for vulnerable customers, and robust oversight by HM Treasury and the FCA to guard against algorithmic bias, privacy breaches, digital exclusion, and AI-powered scams.
Authors
Dr PK Senyo , University of Southampton.
