ICAEW calls for ethical framework for big data

The ICAEW has called for a new ethical framework for the use of big data. The lack of one risks undermining the social purpose of financial services, it warned. It called for businesses, consumers and regulators to work together to protect vulnerable people from being exploited by the growing use of data and artificial intelligence.

The growing use of big data (which includes data from social media, video watching habits, location data and photos, to satellite images, traffic flows and data from smart devices) and artificial intelligence is increasingly changing financial products such as credit cards and insurance policies – as well as the business models of the companies that provide them. There will be winners and losers as a result of these changes. Banks, insurers and other financial services providers need to start managing these tensions now, before products and services spiral away from their true social purpose, the ICAEW said.

Without an ethical approach to using big data, it warned that people could be unfairly or illegally excluded from vital financial services, leaving them without access to insurance or credit, owing to factors they cannot control such as gender, ethnicity, where they live or health conditions. This will also be influenced by factors like where they shop, whether they use cash instead of cards and other information.

These new sources of data, and the ever-growing ability to process them also opens customers up to exploitation, the ICAEW pointed out. This could include targeting people when they’re more vulnerable or offering inducements to increase spending through exploiting behavioural biases.

“ICAEW’s ethical framework will help make sure banks, insurers and other financial services providers don’t take unfair advantage of this information, and it is used for designing more tailored and suitable products to meet consumers’ needs,” said Philippa Kelly, ICAEW head of financial services.: 

However, she added that there are also opportunities to use this information for good purposes. “The ability to better use data means that, for example, we have already seen banks help problem gamblers by allowing them to block gambling sites, and the government is asking online payment providers to help combat university cheating by stopping people from buying essays online," Kelly said. “But this could be a dangerous road. If society wants banks to control how people spend their money for moral reasons beyond the law, then they need a clear remit and there needs to be a wider ethical framework for doing so.”

ICAEW has started to build an online hub with case studies and principles 

This article was first published in April 2019.