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A member of the House of Lords has said that several key bills that will affect payments firms should return to parliament following the UK’s snap election.
Lord Chris Holmes, Conservative peer for Richmond upon Thames, said that bills on AI, data protection and digital ID can and should be prioritised after a new government is formed on July 5.
Speaking at London Fintech Week on Thursday (June 13), Holmes complained that his Artificial Intelligence [Regulation] Bill, which was introduced to parliament last year, was derailed by the snap election.
“My bill was going well — I got it through all the stages in the House of Lords,” he said. “It was all set to start its legislative journey through the Commons, then somebody decided to call a general election.
“No matter how good AI is, it seems that it’s quite hopeless at predicting when somebody is going to call an election.”
Holmes said that the dissolution of parliament on May 30 means his bill has now “fallen” — the parliamentary term for when a bill has lapsed. However, he may have an opportunity to reintroduce it after parliament reconvenes on July 17.
As a private member’s bill, it will have to compete against other private member’s bills in a parliamentary ballot, and it has to finish in the top 25.
Holmes’ AI bill was originally proposed at the commencement of the previous parliamentary year, which took place on November 7, 2023.
A vision for AI regulation
Holmes said he drafted the AI bill with the “essential principles” of trust, transparency, inclusion, innovation, interoperability, public engagement and accountability in mind.
The bill proposes the creation of an AI authority that would serve as a purpose-built regulator for the sector and as a critical appraiser of relevant legislation.
“In no sense do I see this as the creation of an outsized, do-it-all regulator,” he said. “Rather, the role is one of coordination, assuring all the relevant, existing regulators address their obligations in relation to AI.
“Setting up AI regulation in this horizontal rather than vertical fashion should give a better chance of alignment. This horizontal view should also allow for a clearer gap analysis to be drawn out and addressed.”
Holmes said the proposed AI authority should undertake a review of “all relevant existing legislation”, such as consumer protection and product safety, to assess its suitability to address the challenges and opportunities of AI.
The bill also seeks to ensure that business deployment of AI is both “transparent” and “properly tested” by way of regulatory sandboxes.
“We have seen the success of the fintech regulatory sandbox, replicated in well over 50 jurisdictions around the world,” he said. “I believe a similar approach can be deployed in relation to AI developments, and if we get it right, it could become an export in itself.”
Other provisions in the bill would require that every business “developing, deploying or using” AI have a designated AI officer, who would be required to ensure safe, ethical, unbiased and non-discriminatory use of the technology.
DPDI Bill must get back on track
Holmes’ second priority is for the Data Protection and Digital Information (DPDI) Bill to resume its legislative journey following the general election.
As covered by Vixio, the DPDI Bill was set to be the foundation of the UK’s regulatory framework for open banking.
Speaking at Pay360 earlier this year, Conservative MP John Penrose described the DPDI bill as the “one bill to rule them all” in terms of privacy, automated decision-making and obligations for data processors and controllers.
Henk Van Hulle, CEO of Open Banking Limited, told Vixio earlier this month that, had the snap election not been called, it is likely that the bill would have received royal assent before the summer recess.
An ideal moment for digital ID
Finally, Holmes said the incoming government has an opportunity to take the lead on digital ID — an idea that, although controversial, has its supporters within the fintech industry.
Holmes said the rapidly evolving nature of financial services and the ever-present threat of fraud mean that digital ID will ultimately be “critical” to new innovation, customer protection and adoption of new technologies.
“There's understandably a bit of an issue around ID in this country for historical and for cultural reasons,” he said.
“But the fundamental truth is, if we are to realise all of the opportunities that we have in fintech, in Web3, in tokenisation, we will require digital ID.”
Charlotte Crosswell, CEO and chair of the Centre for Finance, Innovation and Technology (CFIT), also offered an endorsement of digital ID at London Fintech Week.
Seconding Holmes’ call for legislation, Crosswell said that digital ID will not only protect consumers from fraud but will also build greater trust and reduce costs for businesses.
Holmes concluded: “I think if we do get a change in government, I sense that we may get some positive action when it comes to digital ID.”
