05.18.23

AI-Generated Recommendations Can Still Fall Under Reg BI, FINRA Exec Warns

by: Patrick Donachie

Firms using artificial intelligence (AI) to generate customized suggestions for clients may not realize those recommendations still fall under Regulation Best Interest (Reg BI), said Nicole McCafferty, a senior director with FINRA’s National Cause and Financial Crimes Detection Programs, at the regulator’s annual conference. “We have firms that use AI tech to generate really customized recommendations for a customer,” McCafferty said. “But sometimes firms think that because it’s a computer system generating those recommendations that they’re not subject to Reg BI.”

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