Introduction
Artificial Intelligence is moving fast—and so are financial services firms looking to take advantage of it. From personalisation to automation, AI is transforming the sector. But as ASIC has made clear, adopting AI doesn’t mean leaving your obligations behind.
In fact, the more you rely on AI to make or support financial decisions, the more essential it is to align with your obligations under Australia’s current regulatory framework.
The good news? Meeting these requirements doesn’t have to be complex or costly. With the right tools and a clear process, firms can act quickly, competitively, and with confidence.
What the Law Says (and Doesn’t Say)
AI may be new. Your obligations as an AFS licensee are not.
ASIC has reinforced that existing laws are technology-neutral. That means your use of AI must still align with your duties to:
Provide services efficiently, honestly, and fairly
Avoid misleading or deceptive conduct
Prevent unconscionable use of client data or behavioural targeting
Ensure directors exercise proper care and diligence
This includes any AI that supports client-facing decisions, marketing, credit assessments, advice generation, or internal operations. If it influences outcomes—it falls under your responsibility.
The Risks of Rushing In
Many firms are adopting AI faster than they’re updating compliance frameworks. This creates exposure to:
Unvetted third-party AI tools
Inconsistent or biased outputs
Inability to explain or justify decisions
Poor documentation or audit trails
Misalignment with privacy or fairness standards
These risks aren’t theoretical. They’re regulatory, reputational, and commercial—and they’re growing with every AI tool added without a governance plan.
Fast, Practical Steps to Stay Compliant
Fortunately, solutions are available—and they’re more accessible than most firms realise. You don’t need to overhaul your business or hire a team of AI engineers. In fact, the simplest, most effective moves are often the fastest to implement.
Start with a Simple AI Use Policy
Map where AI is currently used, and where it’s planned. Identify high-risk areas and define review or escalation thresholds.
Establish Lightweight Governance
You don’t need a full committee—but you do need accountability. Assign someone senior to oversee AI compliance and review outcomes regularly.
Prioritise Private, Auditable AI Tools
Avoid public platforms that expose you to privacy, explainability, or data residency risks. Look for tools that are secure, compliant, and generate traceable outputs.
Build in Human Oversight
Ensure AI supports—not replaces—licensed professionals. Keep a human in the loop for any decision that could impact a client outcome.
Choose Partners That Understand Regulation
Not all AI tools are built for financial services. Work with vendors who understand AFS obligations and can provide documentation to support your compliance process.
A Clear Path Forward
ASIC’s message is clear: if you’re using AI, you’re still on the hook for compliance. But that doesn’t mean slowing innovation or shelving AI projects.
With smart choices, good process, and the right tools, financial services firms can confidently adopt AI that enhances performance—without compromising trust, compliance, or control.
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