The Securities and Exchange Commission will look closely into how financial services companies use data analytics and AI to sell products to consumers, Chairman Gary Gensler told Reuters.
Gensler said the SEC will begin seeking input on how these technologies are changing the financial services industry and figure out if new rules are needed to make sure consumers are protected.
"We're at a transformational time. I really believe data analytics and AI can bring a lot of positives, but it means we should look back and think about what does this mean for user interface, user engagement, fairness and bias," Gensler said. "What does it mean about rules written in an earlier era?"
He said the review which is at an "early stage" will focus on how AI and data analytics are used for marketing, predicting customer behavior and offering financial products based on specific customer profiles.
"These digital engagement practices raise questions as to when marketing becomes advice, when is it a recommendation, what's the duty of care?" Gensler said.
In April, five federal agencies, including the SEC, announced that they were soliciting comments from financial services companies, trade associations and consumer groups into how banks and technology companies use AI.
Robinhood's practice of using prompts in its mobile app to encourage trading drew scrutiny in a February congressional hearing, and the company has since dropped some design features, like its use of digital confetti.