UK
UK signals step change for regulators to strengthen AI leadership
The UK government has announced a major step forward in AI regulation, responding to the AI Regulation White Paper consultation with a commitment to more agile regulation. This includes a £10 million fund to upskill regulators in various sectors, such as telecoms and healthcare, to better address AI risks and opportunities. The approach emphasizes ethical behavior, security, and the need for transparency in AI applications, with specific guidelines for regulators to publish their AI management strategies by April 30.
This initiative is part of a broader effort to maintain the UK’s leadership in AI safety and development, supported by nearly £90 million in funding for nine new research hubs, partnerships with the US on responsible AI, and £19 million toward projects for trusted AI solutions. The government plans to introduce binding requirements for developers of advanced AI systems to ensure safety, alongside a steering committee to guide a formal regulator coordination structure. The strategy aims to balance innovation with safety and responsibility in the rapidly advancing field of AI. Read more at gov.uk.
Solicitors’ regulator in the UK (SRA) launches review of consumer protection after interventions to protect clients doubled last year
The Solicitors Regulation Authority (SRA) has initiated a comprehensive review of its consumer protection strategies due to evolving risks within the legal sector. This review concentrates on two key areas: reducing harm from regulated law firm failures and evaluating the compensation fund arrangements, which support consumers in cases of financial loss due to solicitor dishonesty or firm collapse.
The SRA aims to strike a balance between providing adequate consumer protection and preventing legal service costs from escalating. Triggered by a notable increase in interventions and challenges, including the intervention into larger firms like Axiom Ince, the SRA is looking to address potential high-risk areas such as rapidly expanding ‘accumulator’ firms. The review process will involve extensive research with consumers and engagement with consumer groups and the legal profession to ascertain the most effective consumer protection methods without compromising service affordability or availability.
Anna Bradley, Chair of the SRA Board, emphasizes the goal of achieving the right balance between firm failure prevention and consumer protection, while Paul Philip, SRA Chief Executive, highlights the need for proportionate changes in light of rising risks. The review includes scheduled engagements with various stakeholders throughout March to gather diverse perspectives on enhancing consumer protection in the legal services sector. Read more at Solicitors Regulatory Authority.
MHRA announces two new UK Approved Bodies to certify medical devices
The Medicines and Healthcare products Regulatory Agency (MHRA) has announced the designation of two new UK Approved Bodies, LNE-GMED UK and Scarlet NB UK, to certify the performance and safety of medical devices. This expansion increases the total number of UK Approved Bodies to nine, with LNE-GMED UK focusing on general medical devices and Scarlet NB UK specializing in software and AI as medical devices (AI/SaMD). Additionally, UL International UK and TÜV SÜD have had their scopes expanded to include more categories of medical devices.
These designations aim to enhance the capacity for medical device certification in the UK, ensuring that healthcare professionals and the public have access to high-quality, safe, and effective medical products. Manufacturers, except for those of the lowest risk devices, must obtain UK Conformity Assessed (UKCA) certification from a UK approved body to market their products in England, Wales, and Scotland. The MHRA underscores its commitment to patient safety and access to essential medical devices through this initiative, emphasizing the rigorous assessment and monitoring process each Approved Body undergoes to maintain its designation. Read more at uk.gov.
USA
FDA: Regulatory trends shaping 2024
The Food and Drug Administration (FDA) is set to increase its focus on chemical risks in foods, establish thresholds for allergens, and enforce the Food Safety Modernization Act (FSMA) with greater rigor in 2024. The heightened focus comes after high levels of lead were found in applesauce products and in the wake of California’s partial ban on chemical additives. Enforcement of the FSMA will concentrate on improving traceability compliance and addressing violations of Good Manufacturing Practices (GMPs), with an emphasis on the need for better training and a strong food safety culture. Read more at Food Business News.
Marijuana is big business in US but inconsistent regulations persist
Marijuana has become a significant industry in the US, with projected revenues of $40 billion. It’s legal for medical use in 37 states and for recreational use in 23, yet in the absence of federal oversight, a patchwork of state regulations has emerged. President Biden’s pardon of marijuana use and scientists’ recommendations for rescheduling the drug highlight a shift toward decriminalization and an acknowledgment of its medical benefits. Nevertheless, marijuana still holds a Schedule I classification at the federal level, which is in conflict with state laws allowing its use.
For comparison, consider the marijuana regulations in the Netherlands are more uniform, with strict limits on possession, sales, and advertising, and are thus in stark contrast to the varied, and often more lenient, US state laws. The comparison underscores the complexity of marijuana regulation and the potential for more harmonized policies that could reduce confusion and better address public health concerns. Read more at Forbes.
10 key regulatory issues facing wealth management firms this year
In 2024, financial advisors and wealth management firms face significant regulatory challenges from the Securities and Exchange Commission (SEC) and the Labor Department among other regulatory bodies. The uncertainty of the election year could further complicate these challenges, potentially sweeping away recent regulatory proposals if there’s a change in the White House and Congress.
Consultant Duane Thompson of the Potomac Group highlights the importance of advisors and wealth managers understanding their fiduciary duties and staying informed about legal and regulatory standards to act in their clients’ best interests. Among the key regulatory issues is the Labor Department’s retirement-advice proposal, which could undergo changes based on the outcome of the election, Congressional actions, or court challenges. Thompson also notes the possibility of new regulations affecting the use of client testimonials by smaller RIAs and the use of predictive analytics by RIAs and brokerages, emphasizing the need to prioritize investors’ interests. Read more at Financial Planning.
A final ruling on the proposed changes to HIPAA’s Privacy Rule expected to be announced in 2024
In January 2021, The Department of Health and Human Services (DHHS) issued a Notice of Proposed Rulemaking (NPRM) that proposed changes to the HIPAA Privacy Rule. Those changes were expected to result in cost savings of $3.2 billion over five years.
Key proposals included defining Electronic Health Records (EHR) and personal health applications to clarify individuals’ rights to access their personal health information (PHI), enabling individuals to use personal resources to view and capture their PHI, and modifying requirements for accessing and responding to requests for PHI within 15 days. Additionally, the proposals aim to adjust fees for accessing PHI and require covered entities to provide advance notice of these fees. While these updates intend to alleviate administrative burdens, they will likely require significant compliance efforts, including policy updates and workforce training. A final ruling on the proposal is expected to be announced in 2024. Read more at The National Law Review.
Canada
Urgent regulation of artificial intelligence needed, AI pioneer warns Ottawa
Yoshua Bengio, a leading figure in artificial intelligence, has urged the Canadian government to enact AI regulations swiftly, emphasizing the urgent need to mitigate the technology’s societal risks. Bengio, often referred to as a godfather of AI and the scientific director at Mila, the Quebec AI Institute, highlighted the potential for AI to reach or surpass human intelligence within the next two decades if not sooner. He pointed out immediate dangers, such as the creation of deepfake videos that can spread disinformation and influence political opinions, as well as the future threat of AI-powered cyberattacks that could overpower current defenses.
Bengio stressed the importance of immediate legislative action to address these concerns, even if the initial laws aren’t perfect, to safeguard democratic principles and prevent misuse. Read more at National Post.
Government of Canada mandates federally regulated companies to report pay data
The Government of Canada has mandated all federally regulated companies to report pay data as part of amendments to the Employment Equity Legislation. Launched by Minister of Labor Seamus O’Regan Jr. through the new Equi’Vision website, this initiative aims to highlight the equity barriers faced by women, Indigenous peoples, persons with disabilities, and visible minorities in the federally regulated private sector.
Equi’Vision, a first-of-its-kind platform, offers accessible data on workforce representation and pay gaps, emphasizing transparency for equity. Employers with 100 or more employees are required to submit this data annually, excluding individual salary details. The government’s goal is to encourage businesses to address pay and representation disparities, fostering safer and more inclusive workplaces.
CN, a major Canadian railroad, has committed to paying equity and supports the initiative, acknowledging the complexity of pay gaps influenced by unionization, diversity in candidate pools, and market conditions. CN emphasizes its dedication to diversity, equity, and inclusion (DE&I) efforts, aiming to provide fair opportunities and a supportive work environment for all employees. Read more at Railway Age.
Canada’s banking regulator lays out final guidelines on protecting against foreign interference
Canada’s banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), has issued final guidelines aimed at bolstering banks’ defenses against foreign interference and enhancing integrity and security measures. These guidelines follow the federal government’s expansion of OSFI’s mandate last June to include a focus on preventing money laundering.
The comprehensive guidelines mandate that banks ensure the integrity of board members and senior leadership through background checks, manage access to critical infrastructure, and foster a culture of ethical behavior among employees. Additionally, banks are required to report any incidents of undue influence, foreign interference, or malicious activity to law enforcement. While some guidelines take effect immediately, banks have one year to fully comply with the new and expanded expectations.
The Canadian Bankers Association has affirmed banks’ commitment to upholding the financial system’s integrity and security. Read more at Global News.
EU
Navigating the EU financial regulatory landscape: 10 key developments in 2024
In 2024, the EU financial sector will undergo major regulatory updates focusing on enhancing financial stability, compliance, and innovation. Key changes include the implementation of Basel III, strengthening anti-money laundering measures, and addressing cybersecurity and environmental, social, and governance (ESG) risks. Notable developments include the introduction of new capital requirements, amendments to bank crisis management and deposit insurance, the harmonization of non-performing loans (NPL) handling, and the regulation of crypto-assets. These regulatory shifts aim to foster a resilient, sustainable, and competitive financial landscape in the face of evolving geopolitical and economic challenges. Read more at Lexology.
EU agrees its first ever rules for ESG raters in sector shake-up
The European Union has agreed on its first-ever rules to regulate ESG (Environmental, Social, and Governance) ratings, aiming to address greenwashing and bring more transparency to company sustainability assessments. Under these new regulations, ESG ratings providers within the EU will need authorization and supervision by the European Securities and Markets Authority, while those based outside the EU must have their ratings endorsed by a regulated EU rater.
The rules mandate that raters must disclose the scope of their ratings, emphasizing double materiality, which assesses both a company’s impact on the environment and vice versa. This move seeks to bolster investor confidence and support the transition to a sustainable future.
The regulations also require a breakdown of ratings into environmental, social, and governance factors, with explicit weightings for combined ESG ratings. Smaller EU-based raters are granted a lighter regulatory burden for the first three years to foster growth in a market dominated by major players. The formal approval of the deal is pending, with implementation expected around 2025. Meanwhile, Britain is considering a voluntary code of conduct for ESG raters as a precursor to potential regulation. Read more at Reuters.
World
Cosmetic injectables industry slams crackdown on advertising rules by Therapeutic Goods Administration
The Therapeutic Goods Administration (TGA) has tightened advertising rules for the cosmetic injectables industry, prohibiting the use of colloquial terms, customer testimonials, and before and after photos in advertisements. The move aims to align the industry with other health services and prevent unlawful advertising of prescription medicines.
Practitioners argue the changes, implemented without industry consultation, restrict their ability to communicate transparently with consumers and fear this may drive individuals to seek information from less reliable sources.
The growing injectables industry faces challenges with reports of malpractice. The Australian Health Practitioner Regulatory Agency (AHPRA) has taken action against practitioners following complaints. Despite the intended consumer protection, there are concerns about potential unintended consequences, such as patients seeking treatments in less regulated environments. Experts recommend that potential patients directly engage with businesses and practitioners to make informed decisions about their healthcare. Read more at ABC.
The World Council of Credit Unions (Woccu) urges for proportional regulation for New Zealand’s credit unions
The World Council of Credit Unions (Woccu) is advocating for proportional regulation in New Zealand’s credit union sector, which comprises five credit unions serving 150,000 members. During meetings with New Zealand’s commerce minister and officials from the Reserve Bank of New Zealand (RBNZ), Woccu emphasized the importance of tailored regulations that accommodate credit unions’ unique model.
The discussions follow the 2023 passage of the Deposit Takers Bill, which unified the regulatory framework for all deposit takers, including credit unions. Woccu highlighted the challenges posed by applying bank-designed rules to credit unions, arguing for a proportional application of standards like the Basel Capital standards, IFRS 9, and deposit insurance to enhance safety and financial inclusion, and empower credit unions to support local communities. Read more at Coop News.
Other news:
AI pioneer, Professor Stuart Russell, criticized the UK’s reluctance to enforce strict AI regulation, warning that this approach demonstrates a “complete misunderstanding” and heightens the risk of fraud, disinformation, and bioterrorism, contrasting with the proactive stances of the EU, US, and China.
Chambers Ireland highlights the growing challenge for SMEs increasingly entangled in EU regulations due to the Green and digital transitions, urging Irish candidates in the upcoming European elections to prioritize sustainability and productivity-focused actions amid a landscape marked by Brexit, Covid, and geopolitical tensions.
Rt Hon Greg Clark MP, Chair of the Science, Innovation and Technology Committee, commends the government’s plan for an AI regulatory gap analysis as a crucial initial step towards tackling AI governance challenges, emphasizing the need for a future-proofed framework that addresses identified challenges in AI governance.
Disclaimer: The thoughts, opinions, and commentary of the articles we share links to in Week in Brief do not necessarily reflect those of Ascend Magazine or Thentia.
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