LEADERS SURVEY: ASIC chair Joe Longo is on the hunt for ‘AI washing’ and reveals his message to policy makers

Artificial intelligence is all the rage in Australia’s corridors of power, but the boss of the country’s corporate regulator is issuing a stern warning.

Following the emergence of AI platform ChatGPT in late 2022, corporate leaders in Australia have been extremely bullish about harnessing the potential of AI to drive productivity gains.

Many have touted their AI credentials, but while some are making tangible strides in integrating AI with their existing business operations others might just be paying lip service.

“We’ve seen companies overseas, for example, engage in so-called “AI washing” by deceptively overstating their use of AI,” Australian Securities and Investments Commission chair Joe Longo told The Nightly for its exclusive Leaders Survey.

“This is a serious emerging issue and all Australian companies and their directors should be on notice that ASIC is on the lookout for this conduct here.”

Mr Longo says AI needs to be used in a safe and responsible manner, for instance to combat the growing issue of AI itself being used to power scams.

“ASIC is also focused on ensuring consumers aren’t victim to the whims of AI-driven credit scoring models or algorithms that surreptitiously hike up their insurance premiums,” he said.

“Current laws give us some power here because we can apply existing corporations and financial services laws that are technology neutral.

“We are monitoring AI regulation overseas closely as well, including the European Union’s AI Act that is designed so AI systems are safe and respect fundamental rights and values.”

Mr Longo previously served as the general counsel for Deutsche Bank in London and Hong Kong for 17 years and prior to that was the national director of enforcement at ASIC between 1996 and 2001.

With a long legal career spanning both the private and public sectors, he knows legal reform takes time.

“As a regulator, my job is to work constructively with the government and to provide expert advice, not to tell them how to do their job,” he said.

“When I started at ASIC in June 2021, the first thing I did was to commence a thorough review of ASIC’s operations and structure.

“ASIC is a very different regulator now than it was when I started – it’s more proactive and better set up to face the challenges of the future. These changes don’t happen without acknowledgment that reforming a large organisation takes a significant time and effort.”

On top of AI washing, Mr Longo has two key issues in his sights moving into the new financial year.

“In other areas where I am focused as ASIC Chair, new climate-related reporting requirements will result in more disclosure,” he said.

“This means there will be more information available, which means investors will be able to make better-informed decision.”

The point of focus is the superannuation sector, which Mr Longo says is adapting to an influx of people drawing down on their balances.

“Super funds need to get better at actually providing the services they advertise to their members,” he said.

“This will be a big move for the sector, which has been in an accumulation phase for much of its existence, but we are actively working to make sure super funds improve the way they provide member services.

“Because we know that doing so will ultimately result in Australians having a greater standard of living in retirement.”