As the landscape of AI regulation in Australia evolves to deal with the risk of AI-enabled disinformation, fraud, and privacy breaches, the Government has announced proposals for consumer law reforms to strengthen consumer guarantees, ban unfair trading practices and introduce artificial intelligence (AI) specific protections. 

Treasury has published a discussion paper Review of AI and the Australian Consumer Law seeking views on how the ACL applies to AI-enabled goods and services, including:

• how the existing principles apply;
• the remedies available to consumers where things go wrong;
• the mechanisms for allocating liability among manufacturers and suppliers.

Separately ASIC has published REP 798 Beware the gap: Governance arrangements in the face of AI innovation which gives the results of ASIC’s first state of the market review of the use and adoption of AI by 23 licensees.

The review found there was potential for governance to lag AI adoption, despite current AI use being relatively cautious.

ASIC analysed 624 AI use cases that 23 licensees in the banking, credit, insurance and financial advice sectors were using, or developing, as at December 2023. These were use cases that directly or indirectly impacted consumers.

The findings included

• Not all licensees had adequate arrangements in place for managing AI risks;
• Some licensees assessed risks through the lens of the business rather than the consumer. ASIC found some gaps in how licensees assessed risks, particularly risks to consumers that are specific to the use of AI, such as algorithmic bias;
• nearly half of licensees did not have policies in place that considered consumer fairness or bias, and even fewer had policies governing the disclosure of AI use to consumers.

ASIC is urging financial services and credit licensees to ensure their governance practices keep pace with their accelerating adoption of artificial intelligence (AI).

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Author: David Jacobson
Principal, Bright Corporate Law
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The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.