Data can be harvested from various sources such as social media, location data, personal photos and YouTube habits. Business models, including those for financial services, are changing to incorporate data that can pinpoint consumers.
If the vast swathes of data that are available to businesses go unregulated, financial products like credit or insurance risk losing their true social purpose, ICAEW says.
Using data unethically could lead to unfair discrimination, or could be used to exploit vulnerable consumers. Information on an individual’s gender, ethnicity, or health condition might be found in data held on them and used to exclude them – illegally – from credit or insurance.
Where a person shops, whether they pay with cash or by card, and where they live, could all be unfairly taken into account and used to bar an individual from a product designed to have social purpose.
Since data reveals an individual’s habits, there is a risk that vulnerable consumers could have their behavioural bias exploited, in the absence of an ethical code.
ICAEW points out that the industry is taking on new technology at the same time that one in six borrowers are in financial distress, and many consumers are in difficulty.
Philippa Kelly, head of financial services at ICAEW, says, “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.
“The array of ways we can now invest, borrow and spend money makes things more complex for people and the potential harm to consumers is greater. The ethics of using data and AI in ways that might be optimal for a business but harmful for consumers need to be front and centre.”
Some intervention on the back of access to data has been helpful – such as problem gamblers being allowed to block gambling sites. Still, the ability for banks and financial services to act in such a way needs to be tightly controlled by an ethical framework, as Kelly argues.
“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,” she added.