Robert Taylor of 360 Law Services
By Robert Taylor, CEO and General Counsel of Legal Futures Associate 360 Law Group
While the power of AI presents immense opportunities, it also raises profound legal and ethical challenges. Unlike the European Union, the US or China, which have taken decisive steps to regulate AI, the UK government has opted for a hands-off approach, refraining from introducing specific AI legislation. This policy – or lack thereof – creates a complex landscape for businesses, exposing them to legal uncertainty, liability risks, and potential ethical pitfalls.
The UK government’s decision to forgo AI-specific laws stands in stark contrast to the EU’s AI Act, which establishes clear guidelines on AI risk classification, transparency, and compliance. China has introduced stringent regulations on algorithmic recommendations and ethical AI use, while the US has implemented executive orders and state-level initiatives to address AI-related risks.
In contrast, the UK relies on existing laws such as the Data Protection Act 2018, the Equality Act 2010, and consumer protection laws, with additional guidance provided by regulatory bodies like the Information Commissioner’s Office (ICO) and the Competition and Markets Authority (CMA). While this approach is intended to foster innovation, it leaves businesses in a precarious position, forcing them to navigate a fragmented and uncertain regulatory environment.
Without clear legislative guardrails, businesses need to take proactive measures to protect themselves against legal and compliance uncertainty. International compliance challenges add another layer of complexity, putting UK firms at a potential disadvantage.
When considering areas of risk, AI applications used for hiring, lending, and healthcare could inadvertently breach anti-discrimination laws or data protection requirements.
Liability exposure is another significant concern. If an AI system causes financial loss, discrimination or misinformation, determining accountability under existing legal frameworks remains uncertain. Businesses could face legal claims under contract law, negligence, or product liability principles.
Ethical and reputational risks are another issue. If AI-driven decision-making is opaque or biased, it can lead to public backlash, regulatory scrutiny and a loss of consumer trust.
In light of these risks, businesses cannot afford to wait for UK legislation to materialise. Instead, they must take a proactive approach to AI governance, ensuring compliance, mitigating liability, and fostering ethical AI practices.
The first step is to implement AI-specific policies and governance frameworks. Companies should establish clear internal policies outlining AI ethics, bias mitigation, and accountability. AI oversight frameworks should assign responsibilities within the organisation, and employees should receive training on responsible AI usage.
Contractual protections are another essential safeguard. Businesses should introduce AI-specific clauses in contracts with suppliers, customers and AI developers, covering liability, transparency and data protection compliance. These agreements should ensure that vendors disclose AI methodologies, training data sources, and potential risks, while also setting out dispute resolution mechanisms to address AI-related issues efficiently.
Conducting AI risk and impact assessments is also crucial. Similar to Data Protection Impact Assessments under GDPR, businesses should evaluate AI systems for potential bias, fairness, and legal compliance. High-risk AI applications, particularly in sensitive areas like employment or healthcare, should undergo rigorous review before deployment. Strengthening data protection and cybersecurity measures is another priority, given AI’s reliance on vast datasets.
The UK’s reluctance to legislate AI presents substantial risks for businesses, ranging from legal uncertainty to reputational damage. By taking a proactive approach, businesses can not only mitigate risks but also enhance consumer trust, strengthen compliance, and secure a competitive advantage in an AI-driven economy. Those that embrace responsible AI governance today will be best positioned to adapt to future regulatory changes and thrive in an increasingly AI-powered world.
